Volvo DRIVe campaign

volvo logoExecutive summary

This research project provides a thorough context analysis and evaluation of Volvo Company marketing activities. Volvo, a Swedish multinational manufacturing company, has become one of the biggest manufacturers of cars, trucks, buses and other equipment worldwide. Since 2010, Volvo Cars has been under the ownership of the Zhejiang Geely Holding of China. It formed part of the Swedish Volvo Group until late 90s, when the company was bought by Ford Motor Company. In 2010, Volvo Cars was acquired by Geely Holding. The project provides PEST analysis and SWOT matrix as well as corporate and marketing strategies of Volvo AG. Competitors audit of Audi, Mercedes-Benz, BMW and Lexus demonstrates its strengths in the automotive industry and gives a clear understanding of the current Volvo position in the market. Customers’ characteristics and attitude towards Volvo show how people treat this brand. In 2007, Swedish energy company Vattenfall and the Volvo Car Corporation has launched an industrial joint venture partnership to introduce Plug-in Hybrids on the market. Volvo has introduced its new campaign in order to promote their ecological and economical car line Volvo DRIVe which include seven models. The research project further discusses and analyses the DRIVe campaign, based on Fill (2011) marketing communications planning framework.

  • Context Analysis

1.1 External context

1.1.1 Political

Volvo has established a set of general principles based on consistently conducting business. The company comply with the laws, regulations and taxation of each country in which it operates by demonstrating its commitment to responsible business practice in policies, decisions and other activities. The Volvo group also claimed that they do not participate in any corrupt practices and do not support money laundering as well as any payments, gifts from a third party that could affect their objectives in the business decisions. The Volvo’s code of conduct states that its products and services are presented and complied with applicable regulatory and legal requirements. The company also proposes that they respect and value all employees and the minimum employment age is the age of completion of compulsory school, but never less than 15 years.


1.1.2 Economical

Since 2001, the Volvo has an average annual growth rate of 7 per cent which has been succeeded via organic growth and acquisitions. The long-term financial strategy of Volvo ensures the best use of capital in providing shareholders with a satisfactory profit and offering creditors reliable security. Annually, Volvo discusses the investor’s view of the company with credit rating institutes in order to assess the future ability to repay existing loans. Volvo’s financial representatives maintain good credit evaluations as a base for financing of certain business operations via loans. It is believed that net sales should increase by at least 10% by handling upswings and downturns in each sector to achieve better profitability in a business cycle. In 2013, the company’s net profit was $425 million. Volvo Cars claimed that operating profit rose 17 per cent by the end of 2014.

1.1.3 Social

There is no official data about the Volvo buyers’ profile, however, different sources claim that the average Volvo car buyer is under 35 years old, medium to high income, well-educated and family oriented personality. People between 20 to 35 years old are more likely to start thinking about safety, quality and reliability of their vehicle. For example, the main Volvo cars website shows its concerns about child safety and pregnant women and provide a special comfortable seats, convenient seat belts and extra airbags. Volvo also considers the economic, environmental and social impact of the products and services they offer to their customers, as well as the effect of everyday processes on society and planet. They intend to improve efficiency and minimize the harmful carbon dioxide impact from its own production and, meanwhile, provide significant savings to their clients.

1.1.4 Technological

Volvo has never been slow in going forward in technological perspective. In 2013, Volvo launched Sunsun connect infotainment system with built-in USB and auxiliary connectors, wireless connectivity through Bluetooth and broadband technology. The cars also has been equipped with Park&Pay parking solutions which allow drivers to search for the closest parking and pay for the space from the comfort of their Volvo car. The Glympse app gives an advantage to drivers to share their current location with others and counts the estimated time of arrival. Volvo takes environmental sustainability very serious and they believe they can meet the continuously increasing need for transportation, generate productivity for their customers, and at the same time to reduce emissions of greenhouse gases and other harmful substances. In 2009, Volvo introduced its first eco-friendly and fuel-sufficient technology DRIVe with only 120g/km of CO2 what makes Volvo models the most efficient cars in their respective classes. Volvo DRIVe scheme on S40 and V50 models cost £35 a year to tax in the UK and brings a great value and enjoyment to the driver. Also, Volvo was the first car who introduce a new technology of autonomous parking without the driver inside. The driver uses a mobile phone application to activate the Autonomous Parking and then leave the car. Volvo Company always has innovation at its core what makes it especially competitive in the automotive industry.
1.2 Internal context

1.2.1 Organisation identity

The Volvo Company is based on the principle that every person has the ability and the willpower to improve business operational processes, and the desire to grow professionally. The corporate and brand strategy “Designed Around You” puts people at the core centre and is a foundation and a guide for the business, the products and the corporate culture. Its main concept is to provide the best possible safety for anyone who drives a Volvo or is around a Volvo. The company takes the position that the car is for everyday individuals, with a humorous tone than Volvo is not for well-off people. In fact, the design of Volvo vehicles is based on the drivers’ behaviour, driving satisfaction and maximum possible comfort. Safety is an existing philosophy of Volvo since 1927 and its employees work hard to stay at the forefront of the industry by taking an overall approach to safety.
Volvo also takes economic, social and environmental responsibility to manage risk, create industry opportunities and build trust amongst colleagues and customers. It is the most effective way to contribute to the development and wellbeing of society and eventually to achieve the Volvo’s vision – to become the world leader in sustainable transport solutions.

1.2.2 Culture, Value, Beliefs

Volvo is a global leader in sustainable transport solutions which employs around 110,000 employees, has production in 19 countries and sales in 190 markets. The company’s culture involves the lively and open dialogue between leaders, team members and other colleagues worldwide. They believe that the new Volvo Way, a fundamental policy guide for employees, helps to build energy, passion of work and respect towards the individuals in order to achieve common goals and have a strong motivation to grow further. Volvo also sponsoring two long-term cultural projects, Gothenburg Symphony Orchestra and The Gothenburg opera, as they believe that sponsorship provides useful opportunities to enhance their relationship with customers, employees, stakeholders and to strengthen the Volvo brand within the automotive industry. Three corporate values of quality, safety and environmental care, help Volvo to progress in terms of key benefits it brings to the customers. Volvo’s mission is to make people’s lives easier, safer and better. They believe that they are able create value for customers, pioneer products and services for the transport and infrastructure industries as well as work with energy, passion and respect for the individual. The launch of long-term sustainable strategy in 2012, will help Volvo to achieve these strategic objectives and take the position of the world leader in sustainable transport solutions by 2020.

1.2.3 Financial constraints

In 2012, Volvo cars sales fell by more than 10 per cent in China and the U.S., mainly due to the poor financial performance and weakness in these markets. Volvo sold approximately 40,000 vehicles in March, and 98,000 vehicles in 2013. In Europe, sales decreased 13 per cent including an 11 per cent drop in Sweden, comparing with the previous year. According to Volvo’s Financial Report 2012, the company’s structure is based on a combination of own cash flow, external borrowing and shareholder funding. Three new loan agreements (with China Development Bank, Swedish Export Credit Corporation and other European banks) signed in the period of from December 2012 to February 2013. However, Volvo Car Group reported an operating loss of 577 million, affected by a challenging market situation in the European regions.

1.2.4 Marketing Expertise

Since 1st January 2014 the Grey London, a global marketing agency, handles Volvo’s global creative account, worth of £18m in the United Kingdom and £30m in the United States. Creative agency launched its first global campaign “the Swell” for Volvo’s XC60 model which urged consumers to “seek feeling”. As safety is a major part of Volvo brand, an innovative safety concept called LifePaint has been developed by Grey London and aimed at cyclists to become noticeable on the road at night. Recently, 2000 light-reflective spray cans were given to six bike shops in London and Kent. If successful, the project will grow nationally and possibly internationally. LifePaint totally represents the Volvo’s vision that, “By 2020 no person will be killed, or seriously injured, by a new Volvo.”

1.2.5 SWOT matrix

volvo swot screen

SWOT analytical framework identifies strengths and weaknesses (internal factors), opportunities and threats (external factors) of Volvo Company. The following graph demonstrates the organisation’s position today and where it could be in the future.

1.3 Business context

1.3.1 Corporate strategy

All Volvo work is based on a sustainability perspective which contributes to long-term success. Long-term plans define the direction in a 5 to 15 years and the plans are aligned and reviewed regularly. The company has economic, environmental and social responsibility for the operations, products and services in the area where the Volvo Group has the potential to influence. (Appendix 1) The most recent strategy for 2015 aims at profitability improvement and organic growth. It includes logistics optimization, reducing product cost, improving white-collar efficiency and pushing sales. This will help Volvo to strengthen its relations with business partners and achieve the wanted position by 2020.

1.3.2 Marketing Strategy

In 2014, Volvo has announced its new global marketing strategy the ‘Volvo Way to Market’, which focuses on four areas: marketing tools, digital leadership, dealership and services. Also, Volvo has agreed to concentrate on three international motor shows in the U.S, Europe and Asia, where the company presents new products and innovations to the press and potential customers. Advertising spend is not at the same level of its main competitors, but Volvo plans to increase its investment into their brand message. The company focuses on sponsoring the Volvo Ocean Race, rather than other activities, as it is purely related to Volvo. The marketing strategy also includes digital commerce and industry-leading configurator/website which gives customers a simple and functional experience online. The ‘Volvo Personal Service’ concept provides a personal technician who take every customer through introduction and car ownership. In order to achieve these goals, Volvo has increased its marketing budget.

1.3.3 Brand Analysis

The Volvo brand, Latin for “I roll”, has become one of the most recognizable and famous worldwide, and identifies the company’s products with a reliable symbol of origin and a promise of performance. Volvo brand promises the better design, higher quality and improved productivity within the commercial vehicle industry. According to Volvo Club, the Volvo brand name is simple, smart and easy to pronounce in each country and with a much smaller probability of spelling mistakes. The logo is an ancient symbol for iron and the astrological symbol for Mars which, in turn, symbolizes the male gender and creates associations with steel, safety, quality and strength. The Swedish founders of the company, Assar Gabrielsson and Gustaf Larson, chose that symbol as they wanted a strong and powerful image for their vehicles. The Volvo already exists for 88 years and its logo has always been slightly changing since 1927, however, the symbol still remains the same. (Appendix 2) Volvo’s portfolio has a wide range of industry-leading brands such as Volvo Penta, Sunwin, Renault Trucks, Nova, Prevost and other. The Volvo’s human-centric brand strategy strapline “Designed around you” illustrates the future direction of the company’s brand development. Volvo has been sincere not only towards its brand but also to its customers.


1.3.4 Competitor Analysis

In 2014, Volvo cars’ sales grew 10.6 per cent comparing with its main competitors in the premium segment: Audi sales rose 4.2%, BMW sales increased 5.1% and Mercedes 5.3% (Volvo Car Group, 2015) Despite strong competition in the automotive industry, Volvo still focuses on the car safety technologies as well as quality and reliability what makes Volvo Cars even more noticeable in the global market and increase sales volume. (Appendix 2.1)

competitors screen1competitors screen2
See “Sources. Competitors Audit” in Bibliography

  • Customer context

1.4.1 Segmentation characteristics

In marketing, market ‘potential’ can often be segmented by using various demarcation criteria: demographics, socio-geographics, psychographics and so on. (Dahlen, et al., 2010) Volvo develops cars for their target market of customers whose major concern is personal and/or family safety, for example, newlyweds, young parents with kids, single parent with children or middle-aged people. Volvo divided its market into new and used cars based on their customers’ income and social class. New cars are suitable for high-income personalities (more than £ 50,000 per annum) and these customers are the business people who rely on safe, reliable transportation solutions every day. Slightly used Volvo cars may be eligible for younger people with middle income, known as working class. Volvo customer segmentation age fluctuates between 20 to 35 years. Besides, Volvo offers the following models all aimed at different market segments in terms of age, gender, income and lifestyles: Volvo S40, Volvo S60, Volvo S80, Volvo V40, Volvo V70, Volvo XC70, Volvo XC90 and Volvo C70 convertible. Many personalized extras (leather interior, body colour, sound system) are offered on the website and can be added according to customers’ preferences.


1.4.2 Levels of involvement

The purchase of a new car is often considered as a high involvement decision because the level of risk and responsibility are high. Volvo prices vary between £20,000 and £46,000 depending on the model, engine type, accessories and other options selected. The safety of the car has become one of the most important factors for customers, and people are willing to spend more and more in order to be absolutely confident that they are safe on the road.

1.4.3 Attitude

When referring to Volvo, the customers are always connecting the word “satefy” in their minds what, in turn, helped the company to develop a reputation and take a strong position. For example, the Volvo V40 has been named as the safest car by scoring five stars in the Euro NCAP crash test. (Knapman, 2012) Also, Volvo was the first car who invented a pedestrian airbag in the front bumper. (Appendix 7) The company has positioned themselves as the most innovative and the safest car in the market.


1.4.4 Media Usage

Volvo has released many TV commercials of different models, and puts emotional appeal ahead of functional ability. The most recent ad of Volvo XC90 demonstrates its safety for all road users and how luxury fits with technology. Volvo also publishes its ads in magazines, journals and newspapers. Volvo uses social media (Twitter, Facebook, LinkedIn, Instagram and others) and media services in order to increase customer satisfaction and sell more cars. During the Volvo Ocean Race 2008-2009, the company reached 221,768 registered players from 180 countries for online game and 1.168 billion radio listeners from nearly 1,500 broadcasts. (Media Volvo, 2009) In 2014, Volvo has double its marketing spent over the next five years.

  • Volvo DRIVe campaign

The environmental strategy for Volvo is all under the umbrella name of DRIVe. DRIVe is simply the word ‘drive’ which means leading the way, taking a leadership and that is what Volvo doing. DRIVe is about confidence in the environmental credentials of Volvo products and its customers’ expression of their responsible purchase. This environmental program has been built on three pillars: motion (it is all about power trains and engines), inside (it is about cockpit, the purity of the air in the cabin) and lifecycle (means having the least impact on the environment). Volvo produces several different models with engines that run on bioethanol and emits less than 120 grams of CO2 per kilometer. For example, Volvo S60 with 99g/km of CO2, Volvo V40 with 88g/km or Volvo V60 with 99g/km. (Volvo cars.com) Volvo has decided to focus on energy efficiency, carbon dioxide reduction, materials used and other alternatives. Everything Volvo does is designed around people, so every innovation they make is designed to simplify and improve people’s lives.

  • Marketing communication objectives

The DRIVe campaign corporate objective is to continually minimize the environmental impact of Volvo cars in production, in use, in recycling and to reach zero impact on the environment. Apart from bioethanol, Volvo continues to innovate its cars that can be driven on electricity alone, for example, the most recent Volvo V60 Plug-in Hybrid. Volvo has an objective to change the culture of cars, from a manly car culture into a more intelligent and responsible car culture.

  • Marketing communication strategy

Volvo, together with the European Commission, agreed that advertising cars should not be focused at all on power, tork and high speeds, but on fuel consumption. The following DRIP tactical approach describes and analyses the marketing communication planning of Volvo for DRIVe campaign.

DRIP

Differentiate

By launching the DRIVe campaign, Volvo differentiates from other automotive brands and enables people to choose this brand over another. Volvo, famous for its innovative technology, also wants to take the position of environmentally friendly cars. The main distinguishing feature of the DRIVe engine range is that they are all four-cylinder engines, what makes it exclusively economically attractive to the potential customers.

Reinforce

Volvo DRIVe campaign reminds people about the environment and what harmful impact their cars have every day. Eco driving is an easy way to reduce fuel consumption and greenhouse gases by 5 to 15 per cent. This campaign reinforces people that Volvo cars are not just only about safety features but also about responsibility to the environment.

Inform

Volvo demonstrates how essential it is to take care about the environment, resources and air. They make potential customers aware that ultra-low CO2 means better fuel economy and cheaper tax band. Volvo uses the Internet for creating buzz around new Volvo environmental philosophy, using websites, blogs, brochures and press releases in magazines and newspapers. Volvo DRIVe already grabbed customers’ attention by new emotional TV advertisement together with Swedish singer Robyn.

Persuade

Volvo allows people to arrange a test drive in order to make audiences aware of a brand’s presence and finally persuade an individual to buy and consume a particular product. The new environmental program DRIVe attracts potential consumers and retailers to purchase and distribute eco-drive cars.

2.3 Communication mix

Each tool of the communication mix plays a different role and can perform various tasks. This reflects their different capabilities, attributes and key characteristics. The promotional communication aims at informing and persuading the customer to buy the product and informing him about the quality of the products. Volvo has effectively used advertising, public relations, direct marketing and sales promotion methods.

Advertising

Advertising has the capacity to reach huge audiences with simple messages (Fill, 2011), whether it can be on an international, national, local or direct basis. Volvo eco-friendly models advertising create awareness, change perception, attitude and build brand values, influence behaviour, known as calls-to-action. Volvo’s DRIVe models are XC70, XC60, V70, C30, S40, V50 (appendix 8) and each of these cars have pretty much the same advertisements.
The TV commercials evoke a powerful range of feelings that have the potential to connect with the target audience. These commercials deliver the strongest message about the environment and show that these cars are perfect for driving in town and beyond the city. Volvo demonstrated the main innovative points in their adverts while having a cheerful background music and a strapline “Because Life is Better Lived Together” (Appendix 9). The main advert about Volvo DRIVe, which has been presented by Swedish singer Robyn, has a highly emotional appeal showing every aspect of life. Also, Volvo has launched a series of informational videos on YouTube describing the importance of smaller engines, low fuel consumption and CO2 emissions.
Public Relations

Volvo has decided to get into media relations via press releases on their websites, automotive magazines (Top Gear, Diesel Car Magazine, Auto Express) and online/offline articles in newspapers (Financial Times, Edmunds, Left Lane News, Telegraphs, Business Insider). PR has a wide range of other tools such as events management, public affairs, sponsorship and lobbying. For instance, the Volvo Eco Challenge provides grants of up to £1000 to sailing clubs in the UK since 2008. Environmental care has always been one of Volvo’s commitments for about thirty years and the Volvo Eco Challenge delivers real environmental avantages and encourage young people to become more environmentally aware. Besides, in 2015, Volvo has renew its partnership with The Worldwide Fund for Nature (WWF) in order to stop the degradation of planet’s natural environment and build a future in which people live in harmony with nature. Volvo Group also organised the Sustainability Forum for leaders and stakeholders, the private sector and civil society who are accelerating actions and decisions towards sustainable development.
Direct Marketing

Volvo’s main websites provides test drive option to everyone to try new eco-cars on the road. The nearest Volvo dealer contacts the customer within 24 hours to arrange a convenient time for test drive. This option allows potential buyers to try new product before making a purchase and trust Volvo brand. Volvo Cars also provide other online services such as brochure request and call back option that creates and sustains a personal and intermediary free communication with customers, potential customers and other stakeholders.

Sales Promotion

Every new Volvo V60 Plug-in Diesel Hybrid comes with 3 years’ assistance cover, including free breakdown and recovery help and unique benefits such as Enhanced Journey Continuation Package for Business class. After 3 years, the car is still covered by Volvo Roadside Assistance by an authorized dealer every 12 months. Plug in Hybrid and any other eco-car comes with a 3 year warranty which also covers the first 60,000 miles and 12 years against rust perforation. The battery is covered for 8 years or 100,000 miles- whichever comes first. Volvo also offers V60 at 6.9% APR representative with £500 deposit contribution and 3 years complementary servicing when financed on Personal Contract Purchase with Volvo Car Credit. For example, Volvo V60 Plug-in Hybrid can be purchased with £10,458 deposit and 36 monthly payments of £699. However, such cars cannot be taken and driven until all payments are made. Recently, Volvo has announced its partnership with British Gas in order to provide benefits for new electric vehicle users. Customers who buy the new Plug in Hybrid model are eligible for a free car charging package from British Gas, which includes a charge point and free access to the Polar Charging network across the United Kingdom.
2.3.1 Scheduling

According to the analysis above, Volvo has a pulsing type of media schedule which have a consistently spread, steady pattern of regular but separated exposures. Volvo has advertised its eco-friendly cars in form of press releases, sponsorship and other announcements about the new products range. The schedule for new hybrid models has been introduced more slowly in order to spread a positive word of mouth. Volvo believes that rather than be seen a lot during specific periods, advertising of hybrids should be seen a little all of the time and should be near the period where customers are ready to purchase. Volvo excluded high repetition in advertising effectiveness as they did not want customers become bored, uninterested or irritated about the new product in advance. Volvo, as a recognizable brand, is likely to have immediate attention of customers and a quicker desired effect from the beginning.
2.3.2 Resources

According to AdAge (2014), Volvo is trying to increase sales volume from 470,000 to 800,000 cars in 2014 to 2019, and they increase marketing budgets in the same proportions. The quality of marketing has definitely improved in Volvo, for example, the company has included online services and improved their face to face or offline experience with customers. The DRIVe campaign and overall environmental program of Volvo, helped the company to allocate the right amount of resources into promotion of their vision and reach the specific level of profitability.

2.4 Control and evaluation

Every organisations review and evaluate the performance of their various activities, and Volvo is not an exception. In 2013, the company sold 7,739 V60 plug-in hybrids (Motavalli, 2014) but later the Volvo Cars reported a record sales in 2014 mainly in China and Western Europe. With 465,866 cars sold, Volvo still continues to expand in all markets in 2015. (Volvo car Group, 2015) Volvo’s highly competitive DRIVe cars with best in class performance and fuel economy are important factors behind the continued European success. In the Netherlands, positive sales driven by strong demand for the V60 Plug-in Hybrid and V40 were the base for increased market share to 5.5 per cent. The success of the promotional strategy shows that Volvo is operating well in achieving its objectives and planning to double its production by launching new XC90 T8 Plug-in Hybrid in China, U.S., Europe and other markets by 2016.
Due to the high cost of Volvo eco-friendly cars, many potential customers cannot financially afford such privilege and most of them either prefer other Volvo models or even another brand. However, if the price was lower, Volvo probably would not lost its customers and might increase sales volume. Despite this fact, the statistics show that prices tend to decrease after the newer model is released and demonstrated to the publics.

3.0 Conclusion

This research project critically analysed the internal, external, business and customer context of the Volvo Company and provided a broader discussion of DRIVe campaign. Volvo cars, known for its safety features and innovative technology, has demonstrated their concerns and ability to take care about environment. Several vehicle models with four-cylinder engines provide an outstanding performance and fuel-efficiency with lower level of harmful substances. In collaboration with the Grey London global creative agency, Volvo has double its marketing spend and, in turn, get a higher degree of brand awareness and interest amongst existing and potential customers as well as other stakeholders. Volvo’s objective is to change the car culture and become more intelligent and responsible towards people and environment. Further discussions was based on promotional tools such as advertising, sales promotion, direct marketing and public relations for DRIVe campaign. Volvo has definitely increased its profits and sales volume in the recent years worldwide. Today, Volvo continues to strengthen its competitive position in the automotive industry and the launch of sustainability strategy in 2012 will help the company to achieve its objectives and become the world leader by 2020.

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Business Report 2015 for Optimax Eye Laser Surgery

optimax

Executive summary

This business report provides a thorough analysis and evaluation of the possible internationalization strategy for Optimax, a UK based eye laser private clinic. The report discusses the main reactive and proactive motives for Optimax to enter international markets and provides arguments for choosing particular countries for the short and long term development. Qualitative and quantitative research strengthen the arguments for choosing international markets by measuring political, commercial, industrial and financial risks as well as analyzing the overall country attractiveness including competitors information and market data. It is further discusses the overall strategic approach to market entry, in a form of franchising, for the short term development. The report provides valuable arguments and statistics for the link between the target market and the Netherlands market information. The “Seven P formula” of marketing mix evaluates the Optimax business activities in the foreign market.

  • Introduction

The purpose of this business report is to identify how Optimax, a UK laser eye treatment clinic, can enter international markets. The paper provides a detailed and well-structured international marketing strategy for a business that is currently operating in the highly competitive market. It further discusses short and long term market selection propositions including standardization and adaptation to it supported by strong theoretical arguments. This report is written specifically for Mr. Russell Ambrose, the founder and proprietor of Optimax, in order to propose appropriate ideas and suggestions for business expansion from national to international level.

  • Reasons to go international

After initial success in the domestic market, Optimax has the capability to exploit the competitive advantage internationally. There are a number of reactive and proactive reasons for Optimax to go international. Despite the fact that Optimax has 28 clinics nationwide and a good reputation, the business may still perceive the competitive pressure from Optical Express, Ultralase, AccuVision and other eye laser clinics in the UK. A further reason is that Optimax has enough financial resources, innovative technology and has already shown the best results under the safety conditions that gives a clear motive to go into international markets and double the firm’s revenue and profits. This leads to other proactive motives such as the desire for business growth, the capabilities to enter foreign markets and to provide a reliable service. Optimax has been approved for having an excellent internal and external management since 1991 and currently the company has a managerial motive to acquire more experience and knowledge in foreign countries. Likewise, Optimax has successfully compete in domestic market and realized that it is no longer an option to stay only in the UK as they also have potential for development.

  • Market selection

Having considered both the proactive and reactive motives to go international with Optimax business, it is reasonable to choose the market or markets. Market selection is one of the most significant aspects towards the success of the internationalization process. Choosing the right markets and the right sequence of entry is an integral part of international competitive strategy. The Uppsala model of internationalization proposes that firms firstly select geographically and psychically close countries and then move to more distant countries. The following table illustrates a shortlist of six European countries which are psychologically and geographically close to the UK and provides environment and market analysis.

Country GDP per capita (USD) Population (million) Unemployment rate Psychologically close Geographically
close
Ireland 50,503 4.6 10.0 %
Germany 43,931 80.6 4.7 %
France 42,503 66 10.2 %
Netherlands 50,793 16.8 7.2 %
Belgium 46,877 11.2 8.5 %
Denmark 59,831 5.6 6.2 %

According to qualitative research, Ireland, the Netherlands and Denmark are the most suitable countries for Optimax to expand internationally for short or long term. Ireland and the UK have the common travel area, linguistic and cultural similarities, good political and economic relationships and the UK is Ireland’s biggest trading partner. Similarly, The Netherlands have a strong partnership relations with the UK and both countries are under a constitutional monarchy. Dutch-British trade is simple by good relations, transparent legal framework and financial service system, good transport solutions and close geographical proximity. The Netherlands and the United Kingdom work together within the European Union, NATO and the UN, and agree on subjects such as the European internal market, free trade and EU funding. It is essential to note, that 90% of Dutch people speak the English language. Denmark and the UK have close relations in terms of export as both countries are full members of NATO and the European Union. In Denmark, 86% of people admitted knowing and speaking the English language. (European Commission, 2012) Political, commercial, industrial and financial risks are quite low in these three countries what makes it especially beneficial and accessible for the UK based Optimax to enter foreign markets. There are a couple of reasons for excluding Belgium, France and Germany as international partners for Optimax:

  • Germany has a very competitive market due to its technological advances and innovations.
  • France and the UK are not psychologically close.
  • Belgium is expensive country to run a business. Language barrier exists.

The firm in international markets always deals with competitors in its own domestic market and in each international market it enters. The number, size and quality of competitors affect the firm’s ability to enter and compete profitably in a particular market. The graphs below provide information about direct and indirect Optimax competitors in Ireland, the Netherlands and Denmark.

Country: Ireland

Clinics Locations/sites No. of procedures Prices (approx.)
Optical Express 1 site in Dublin N/A €2,195 to €1,590
Laser Vision 1 site in Dublin N/A €1,990 to €3,990
Optilase 11 sites across Ireland 40,000 €795 to € 2,990
Wellington Clinic 1 site in Dublin Over 40,000 Up to €4,100

Country: the Netherlands

Clinics Locations/sites No. of procedures Prices (approx.)
Optical Express 1 site in Amsterdam N/A €2,195 to €1,590

Country: Denmark

Clinics Location/sites No. of procedures Prices (approx.)
ReLex (at Copenhagen Eye Centre) 1 site in Copenhagen N/A €2,000 to €4,583
  • Long term

Despite the fact that Ireland and the UK have good political and economic relationships as well as cultural similarities, Ireland market may be considered as a highly competitive for Optimax to enter. In a competitive world, it is difficult to create added value. In order to obtain a sustainable competitive position, Optimax managers need to understand the nature of the dynamics of the Irish industry what includes many points to consider, for example, competitors’ marketing programs and their behaviour, best distribution method and its cost, consumer behaviour and preferences toward the UK eye laser clinics. In general, it is quite difficult to determine the competitive structure of international markets and requires a specific amount of time, resources and skills in order to enter such a competitive Irish industry market. Similarly, the market analysis of Denmark justifies that Optimax has the potential to successfully expand internationally due to its low competition and cultural similarities, however, the transportation fee may be higher. The expenses in moving equipment or personnel from the UK to Denmark are higher than from the UK to Ireland, or the UK to the Netherlands. The table below shows the geographical distance from the UK to Denmark, the Netherlands and Dublin in kilometers.

From the UK, London to…
Denmark, Copenhagen The Netherlands, Amsterdam Ireland, Dublin
1,260 km 537 km 598 km

Adapted from Google Maps

Optimax can establish itself as a late entrant in Ireland and an early entrant in Denmark market. Being an early entrant in Denmark, Optimax need to be in a position to react or even better anticipate potential entrants and increase barriers to late entrant. Optimax can gain a competitive edge and grab the opportunity to take the best market place. However, the cost of being an early entrant can be high due to technology or distribution channel establishment as well as the risk level of failure in the market can be also high. Both, Denmark and Ireland markets, require a greater amount of time for market screening and strategy development for a long time in order not to fail during the internationalization process. Two timeframes below illustrates the Licensing entry mode for Ireland and Joint Ventures entry mode for Denmark for a long period of time.

Licencing
Licensing long term entry mode for Ireland

JV
Joint Venture long term entry mode for Denmark

3.2 Short term

According to secondary research and the market selection tables in Section 3.0, the Netherlands market seems to be the most attractive for Optimax for a number of reasons: very low competition, most of Dutch people go abroad (the UK, Turkey) to do eye laser surgery, low cultural and geographical distance, low level of risk to fail and high demand for experienced eye specialists. The following business portfolio matrix illustrates that the Netherlands is a highly attractive country and, similarly, Optimax compatibility level with this country is also high. The matrix concludes that both factors are very compatible and, in turn, create a primary opportunity for Optimax to enter the Netherlands market and operate successfully.

With country markets and product categories in those markets developing at different rates in different time frame, success often depends on entering the market at the right time and applying the right strategy at the right time (Clarke and Wilson, 2009), also known as timing of entry in to international market. On a small scale entry, Optimax should take the position of a late entrant due to the existence of competitor in the market of the Netherlands. By taking such position, Optimax takes the competitive advantage over its main rival Optical Express. Late entrants are often able to gain more knowledge and learn from the mistakes done by their competitors. Due to the low level of competition, Optimax is able to imitate the early entrant and, meanwhile, to work well as the firm has enough resources to compete. As a late market entrant, Optimax can succeed by adopting distinctive positioning and marketing strategies. The selection of franchising as an entry mode for Optimax can give a greater access to a foreign market in the short term. Potentially, the franchise system provides an effective blending of skills centralization and decentralization, and has become an increasingly important form of international marketing. (Ghauri, 2010) The below illustrated strategy timeline shows the establishment of franchising mode entry for Optimax for a short term. It has been divided into two main stages: stage 1 is all about business and marketing strategy development, market analysis, final evaluation and assessment of future actions. Stage two includes legal deliberate business strategy implementation in to a foreign country, marketing management tactics and monitoring the internal and external changes within the business as it may suddenly require an emergent strategy adoption.

short time framw

The overall strategic approach to market entry, in a form of franchising, for a short term for Optimax will be analysed and thoroughly explained in Section 4.0.

  • Overall strategic approach to market entry

According to the Uppsala model theory, the firm should choose low-risk entry modes first in order to succeed in foreign markets. Contractual agreements between franchisor and franchisee provide clarity of corporate aims and objectives and meanwhile generate cooperation and trust between both business partners. Franchising strategy (direct or indirect), a low-cost entry mode with low level of risk for the short period of time for Optimax, implemented into the Netherlands market can provide a greater degree of control and quick development of international market thus generating economies of scale. In fact, Optimax can increase its degree of control by training its franchisee in relation to policies, values and processes. The incremental or organic learning model justifies the reasons for Optimax to enter the Netherlands market first, as the most geographically and psychically close country, and Denmark and Ireland countries that increase the level of internationalization complexity of the firm. The graph below demonstrates the path to internationalization of Optimax.

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In term of adaptation, a key concept in international marketing, Optimax should keep its uniqueness and to develop an understanding and willingness to accommodate differences that exist in the Netherlands market. Ghauri and Cateora (2010) proposed a couple of basic requisites for cultural adaptation in foreign countries: tolerance, flexibility, humility, adjustability, ability to integrate, ability to command respect, liking for others, knowledge of country, curiosity and fairness. The following table describes the most important adaptation aspects that Optimax must take into consideration before entering the Netherlands market.

Aspects for adaptation
Ø  the Dutch people are conservative and pay attention to the smallest details
Ø  highly tolerant of individual differences
Ø  no poverty in the country
Ø  they are private people and do not put their emotions on display
Ø  the handshake is the common form of greeting (including children)
Ø  most Dutch only use first names with family and close friends
Ø  Dutch value their personal time (do not ask them to work late or come over the weekend)
Ø  punctuality for meetings is taken extremely seriously
Ø  the Dutch are detail-oriented and want to understand every innuendo before coming to an agreement
Ø  contracts are enforced strictly

Source: Kwintessential (2014)

Optimax, known for its high quality service standards in the UK, should follow a consistent level of quality in the Netherlands and make sure that services are performed in the same manner regardless its main franchisor. Optimax clients have confidence in their services because the firm has used an appropriate standard and has gone through independent assessment. Similarly, by having the identical standards in the Netherlands and the UK market, can help firms to improve communication, to stream internal processes and to minimise business costs and risks. (Gov.uk, 2014) The standardization area of personnel qualifications is particularly important to Optimax foreign market as it reflects the overall quality of the service what makes customers to choose Optimax. Due to the fact that the Dutch people strictly enforce contracts and agreements, it is more likely that Optimax, as the UK based firm, will be able to develop strong and trusted business relationships and agree on standardized terms and conditions with its Dutch partners.

  • Target market supported by market information

The majority of Dutch people wear glasses or contact lenses (Statistics Netherlands, 2013). For older people, it is exceptionally rare not to use glasses or contact lenses. 61% of people reported to wear glasses, lenses or other reading or visual aids occasionally in 2012, versus 57% in 2001. Interestingly, more women than men wear glasses or contact lenses in the Netherlands. People in their 40s wear glasses, while the rate for people in their 50s is more than 90% and nearly over-75s wear glasses. The percentage of people wearing glasses (57%) is much higher than the percentage of contact lenses wearers (12%). It has also been revealed that 9% of people tend to use both. According to the Netherlands Statistics (2013), full-time contact lenses wearers are generally younger and the rate is higher (79%) comparing with people wearing glasses (54%).

  • Branding and positioning

To launch a brand in a foreign market means deciding whether to portray the brand as local, global or from one of its origins associated with the product/service capability. (Clarke and Wilson, 2009) Optical Express, the main competitor for Optimax in the Netherlands market, left its brand name the same as it is in the UK. Similarly, Optimax should establish themselves with its brand name in the foreign market as it shows the quality, the experience the firm has and the individuality. However, it is recommended that the Dutch version of Optimax website contains more information about the company, its services and prices, the reputation it has in the UK and should be more oriented towards the Dutch customers’ preferences. Also, the word “optimax” sounds completely the same in the Dutch language, so in that sense, there should not be any misunderstandings or mispronounces with the Optimax brand name. Optimax brand could be positioned by emphasizing the attribute such as the service benefit or by implicit or explicit comparison with competitors.

  • The “Seven P Formula”

The table below analyses the 7P’s of marketing mix and provide arguments for each point.

 

Product

In this case, product means service or production. Optimax should provide a wide spectrum of services in order to meet customers’ requirements. Service should be provided according to the culture (Inc. Language)
 

 

Price

Optimax should consider the pricing factor in terms of service cost to the customer. It must be the same price as competitors’ or lower in order to successfully establish in the market. The price may go higher over time, if Optimax positions itself as the number one eye laser surgery in the Netherlands market.
 

Place

Optimax should open its first venue in Amsterdam as it is more likely to be noticed by people. (Amsterdam population 820,000 approx.)
 

 

Promotion

Optimax should invest in marketing programs, e.g. advertising (online and offline), PR (press releases, newspapers), promotions (vouchers, discounts, special sales) in order to increase awareness of the new service in the Netherlands. The use of online media (blogs, journals, forums) can help Optimax to get positive word of mouth
 

People

It is essential for Optimax to recruit and train the right staff in order to create a competitive advantage in the foreign market. The firm should follow its quality standards and show best practices in the Netherlands.
 

Process

All Optimax services need to be underpinned by clearly defined and efficient processes. This will avoid confusion and promote a consistent service. The process can include direct communication with the customers by emails, SMS, Live Chat on the website or professional free consultation in the clinic.
 

Physical evidence

Optimax clinic in Amsterdam must be well designed and simple. People must feel safe and calm. In that case, the firm will enhance customer experience and get positive feedbacks.
  • Conclusion

This business report for Optimax critically analysed and suggested the possible internationalization strategy in three countries, the firm’s cultural adaptation and standardization to it as well as the 7P’s of marketing mix. All the statements were supported by arguments, graphs and table in order to provide a clear understanding of Glocalisation continuum or Internationalization process.

Consumer Behaviour: The Issue of Illegal downloading

illegal

The central theme of this literature review is to critically analyse consumer behaviour theory and clearly justify the reason for dubious, criminal, deceptive or fraudulent behaviour of individuals aged under 30. The literature review also centers on critical thinking using industry examples and provides other supporting evidence based on different authors viewpoints. In this paper, the comprehensive discussion focuses on illegal downloads issue and demonstrates the application of theory to the chosen topic area.

Illegal downloading issue and statistics

There always has been a lot of discussions amongst different writers, authors and journalists about illegal downloading, also known as copyright theft or piracy of video, audio, games and other electronic products. The report, supported by the Intellectual Property Office, found out that almost one in six (18%) of internet users aged 12 or over accessed digital entertainment media using an illegal service. (The Guardian, 2013) The popular perception of those hurt by piracy is large companies and pop stars whose personal wealth is legendary, firstly noticed by Gursey (1995). In 2013, Philip Pullman stated that illegal downloading is ‘moral squalor’ and theft, similarly as reaching in to someone’s pocket and stealing the wallet. He also claimed that authors and musicians with a low budget still put a lot of effort and time doing their job in order to financially support themselves and, meanwhile, satisfy their audience. This argument was earlier supported by Rob and Waldfogel (2004) who found out that each downloaded album reduces purchases by approximately 20 per cent but raises individual consumer welfare. In contrast, Gurnsey (1995) stated that ‘piracy is not the only form of copyright theft’. (p.1) He suggested that while piracy represents the systematic and large scale abuse of copyright, at another level there is the casual everyday abuse of copyright which occurs in millions of homes, schools or universities and business enterprises across every country in the world. The Economic Times defined piracy as the unauthorized duplication of copyrighted content that is sold at significantly lower prices in the ‘grey’ market. Thus, for too many, both politicians and consumers, audio piracy is still perceived as a largely victimless crime. The Copyright, Designs and Patents Act 1988, amended by the Copyright and Trade Marks (Offences and Enforcement) Act 2002, currently protects copyrighted materials. People who distribute and download copyrighted recordings without permission face civil actions for potentially thousands of pounds of damages. (The Independent, 2009) Yet it 1995, Gursey claimed that ‘the sad fact is that the market for piracy is largely based on greed’, and if people accept this situation as inevitable part of human life, there always would be a low-cost market with illegal materials like audio, software, video in the next ten years. In fact, software firms frequently spend thousands or even millions of dollars in creating the programs, however many people illegally download it from unauthorised sources what has become a key issue for the computer industry. Evidence for in support of this assumption was found by five firms: Atari, Reality Rump, Top Ware Interactive, Techland and Codemaster in 2008. These computer game companies have suspected thousands of internet users who shared illegal downloads and sent warning notices to pay £300 fine in order to avoid the court. According to Daily Mail, a number of people had to pay approximately £16,000 after being taken to court by TopWare computer game manufacturer. (Revoir, 2008) Another unpleasant example, published by The Guardian in 2012, illustrates woman who was accused by Recording Industry Association of America (RIAA) for downloading and distribution of 1,700 music files and she had to pay $9,250 for each illegal downloaded material. Today, due to the technical change and innovation in hardware and broadcasting, there is a continuous battle as rights owners seek to control and remuneration for the use of their work. Piracy, or illegal downloading, still remains a significant issue in every industry. (Lee, 2012)

 

Fraudulent behaviour of individuals aged under 30

In 2008, more than 40 billion music files were illegally downloaded although state, federal and international laws restricting these actions (IFPI, 2009). According to WARC research (2014), almost 50 per cent of children between 8 to 15 years old admitted that they were able to download or access any content for free from the internet. This age group also showed an above-average propensity to agree that using file-sharing websites was easy (6%) and a usual thing to do (7%). It has also been mentioned, that a similar amount of people 16 to 24 years old stated that online content should be free and the report noted that ad-supported services, such as Spotify, YouTube and Blink box, tended to be the most popular with this age group. A number of authors (Summers, Schwarzenegger, Ege and Young, 2014) noticed that particularly in the music and TV industries, user behaviour has been influenced by the opportunity to download material for free. However, Ulsperger, Hodges and Paul (2010) claimed that college students in the U.S. tended to be more critical and serious about CDs shoplifting from the store comparing with illegal music downloading online. In turn, Levin et al. (2004) further identified that college students who illegally downloaded music and other files for free had lower ethics ratings than students who had never downloaded illegally. According to James McCoy, YouGov Research Director, children and teenagers in this generation grew up with digital material and now have an access to what they want, when they want it and sometimes not paying for it. (WARC, 2014) Similarly, Plowman and Goode (2009) agreed that concerns about price factor were one the strongest predictors of future desire to illegally download music, even amongst students and pupils who had never done this earlier. Consequently, all these research showed that students with more favourable attitudes and higher perceived behavioural control were more likely to download illegally than those who had less favourable attitudes and lower perceived control. Additionally, Cronan and Al-Rafee believed that moral obligations influenced digital piracy intentions.
Ethics, or moral philosophy, has been defined as a system of what is good and what is bad, however, people might still continue to engage in dishonest, criminal or dubious behaviour when trying to make a decision between right and wrong. People engage in an action that is admitted unethical or harmful and usually do not believe that what they are doing is right because “everybody does it”. (Ethics Alarms, 2015) From a psychological perspective, the more people are involved in illegal downloading or any other issue, the sense of responsibility and fear decreases noticeably. According to the authors’ viewpoints above, people between 16 to 24 years old believe that those companies or websites which provide illegal content should be severely punished rather than those who access the content. Such thoughts make people not feeling guilty or bad when downloading free music, movies or software from the internet as they believe they do not break the law and do not go against social and personal moral values. Solomon, et al. (2013) propose that ‘humans are social animals’ and look at others’ behaviour for signs about what to do in publics. They also suggested that people desire to ‘fit in’ or to identity with desirable individuals or groups is the primary motivation for many of consumption behaviour. Sometimes, however, many reference groups are involved in negative influence on consumption behaviours, e.g. illegal downloading.
Interestingly, educational levels also play a massive role in the likelihood that somebody pirates content. According to The Telegraph survey, it has been revealed that 3% of pupils who left school at the age of 15 had illegally downloaded material in the previous 12 months, rising to 6% of those who studied to between 16 and 19 years old, 10% of students who continued their education until they were around 20 years, and 27% of those students who were still studying beyond that age. (Sparkes, 2013) This has been more discussed by Solomon et al. (2013): people learn that every actions they take, result in rewards and punishments, and this response influences the way they respond in analogous situations in the future. Similarly, Blythe (2013) agrees and continues that illegal downloading shows how punishment fits into the learning process. So, the idea of sending a warning letter to internet users who illegally download or distribute materials, is based around operant conditioning (concept of reinforcement). Moreover, the ABC model of attitudes and hierarchies of effects best describes different behaviour and intentions to do something towards the particular product or service. The low-involvement hierarchy (Do, Feel, Think), properly illustrates a typical consumer who download stuff illegally but do put too much effort into evaluation of his/her decisions and potential issues it may cause. (Solomon, et al., 2013) Consumers does not have a strong preference for the brand over another, but instead acts on the basis of limited knowledge and then forms an evaluation only after the audio or video has been illegally used. Internet let individuals stay anonymous users, what makes it harder to detect the deviant behaviour. There is no face to face contact so internet users do not feel guilty for downloading illegal material and they are more likely to stay unpunished. In 1999, Albers-Miller highlighted the point that ‘when there is a lack of fear of punishment, people do engage in inappropriate behaviour.’ (Inderbitzin, Bates, Gainey, 2012) It is further discussed, that consumers are naturally want to minimise risk (Blythe, 2013), however, the perception of risk can be “traumatic” (Chaudhuri,2006) For example, in 2014, Mirror newspaper released an article about two teenagers Robinson and Graham who ran a website that allowed users to download music tracks for free before the official release. Despite the fact that website creators have tried to hide their identity online, the British Phonographic Industry (BPI), police and Homeland security have found and taken them to court. Both teenagers were jailed from one to two years. (Kennedy, 2014) It may also be a case that people perceive risk differently (Blythe, 2013), based on their age, confidence and other factors. A number of authors (Byongook, McCluskey, McCluskey, Perez) proposed that youths with low self-control are more likely to engage in the illegal downloading in any form. According to a general theory of crime, generation Y spends more time using computers what creates strong addiction and may cause criminal behaviour. (Gottfredson and Hirschi, 1990)
The above mentioned examples illustrate Freudian theory, where person’s selfish and illogical id is entirely oriented towards immediate satisfaction. It operates according to the pleasure principle that behaviour is led by the primary desire to maximise pleasure and avoid pain (Solomon, et al., 2013), what mostly describes people behaviour under age of 30 who illegally download internet content without thinking of potential negative consequences.
Worldwide solutions to an issue over time and parental influence

In 2011, audio, movie and other software companies started to work on a detailed proposal for a voluntary system whereby broadband providers (such as BT, TalkTalk, Virgin Media) block hundreds of websites promoting online piracy (Bradshaw, 2011) as the UK’s creative industries contribute £71bn to the UK economy and support about 1.68 million jobs. (BBC, 2014) According to Gibbs (2014), the launch of Vcap (the voluntary copyright alert programme) in 2015 will help to identify the IP addresses of users who download illegal material for free. Further actions involve sending a warning letter about the suspected infringement to the registered subscriber of particular broadband connection. Similarly, the identical scheme has been already developed in the United Stated. Hill (2013) claims that Mark Monitor, the United States anti-piracy group with 100 employees, automatically catch the IP addresses of those who use AT&T, Cablevision, Verizon and other internet providers. Another earlier example by Gurnsey (1995) claims that Russia has been made a significant progress in curbing piracy. Russia had introduced laws which included the hardest penalties seen anywhere in the world for large copyright theft: to close servers located in their territory and websites that promote illegal distribution. (Kim, 2012) Each of these industry examples and solutions make an important contribution to the understanding of the role of learning and memory. Some authors (Solomon, Bamossy, Askegaard, Hogg) claim that memory involves a process of gaining information and keeping it for a long period of time so that it will be available when required. So, once an internet user faced with a problem of illegal downloading and received a large sum of money to be paid for this act, he is more likely to remember this unpleasant experience and tend not to repeat such situations in the future. It is a very useful method of educating people not to infringe copyright.
A British study suggests that there are four main types of “pirates”, the serious ones actively and very often seeking out occasions to pirate (‘Devils’), the opportunistic ones that will rarely take a chance on pirating but not very often (‘Chancers’), pirates who are not actively pirating but accept receiving pirated material (‘Receivers’), and the ‘Angels’ who ignore any sort of pirating. (Cockrill and Goode, 2012) According to these classifications, different penalties in various forms reach internet users worldwide. A number of authors claim that parents play a huge role in the education process and are the key source of their children behaviour. 85 per cent of children in Australia have admitted that they never had a conversation with their parents about this issue. (source: news.com.au) The same viewpoint has been investigated by Solomon et.al. (2013) that children learn by watching their parents’ behaviour and imitating it. At a very early stage children see how their relatives obtain the things they need, so parents who pirate content are more likely to have children who do the same. In turn, Humphries (2011) provides an example of a 15 year old boy who faced up to two years in prison for downloading 24 films from BitTorrent at school. As long as parents and teachers are not clear about what is moral behaviour in the internet sphere and are not enough active in their children’s life, it will be quite difficult for adults to convey normative behaviour to children and teenagers.
According to the U.S. Guardian newspaper, piracy is most acute on college and university campuses where students have high speed internet as well as have more free time than money. Only a couple of universities have responded to the complaints of illegal downloading, while most of them stayed neutral to this issue as they believe that piracy issue must be dealt by police. (MacAskill and Conor, 2007)
Individual factors

Blythe (2013) claims that one of the problems with understanding consumer motivation is that people are usually unable to be specific what has driven them to a particular action. Solomon et al. (2013) add that personal and cultural factors combine to create a want which can be satisfied in any number of ways. According to the online survey by Australian news (2010), it has been revealed that convenience was as much of a motivating factor as money for people who illegally downloaded or streamed media. Later, a similar view has been published in WARC article (2014) which claimed that price is still the major motivator in the decision to use file sharing sites. Moreover, 50 per cent of adults and 50 per cent children who download free content from internet admitted that the main reason for such behaviour are cost saving factor, convenience and easy accessibility. Blythe (2013) further believes that sometimes people make wrong decisions, and rationalise their real motives afterwards rather than admit their mistake. Equally, people who are motivated by illegal and immoral needs, are extremely likely to keep it only to themselves. Gottfredson and Hirschi concludes that low self-control is the cause of crime and criminal activities and that an individual with low self-control is less likely to resist the easy, immediate gratification that crime and deviant behaviours provide.

 

Conclusion

In conclusion, more than 20 years ago illegal downloading, or piracy, has become a starting point to a massive issue by 2015. It has become one of the major threat to the music, movie and software industry. Many authors agreed that illegal downloads of audio, video or software material and peer-to-peer (P2P) content sharing problem are more likely to happen with people under 30. Children and teenagers usually have no clue about what is personal moral values, risk and do not think of potential negative consequences in the future. The above studies also discussed the point that educational level and parents’ behaviour has a significant impact on how likely the individual will be involved in criminal, dubious, deceptive and fraudulent act. A number of different industry examples prove the fact that copyright theft, or illegal downloading, can lead to severe punishments such as prison sentence or monetary fine, depending on how serious the problem is and the type of piracy. A lot of literature concludes that illegal downloading and distribution of pirated materials in any form still remains one the most significant issues due to its complexity in technological sense and consumer individual behaviour.

Premier Gold Resources Plc or Prospex Oil and Gas Plc.

logo

Premier is a gold exploration and development company admitted to trading on AIM. The company owns 100% of the share capital of CAR (Central Asia Resources Ltd), a company which, in turn, hold 80% of the shares of Premier Asia (together, the ‘Group’). The Group focuses on gold opportunities in Central Asia, in particular the Kyrgyz Republic.
The company is not yet producting minerals and so has no income other than a small amount of bank interest. The company has been predominantly dependant on cash advances from Tridevi drawn down under the Convertible Loan Agreement, and as announced on 26 September 2014, in order to preserve the capital available, the Company has suspended all directors’ salaries. The company’s current working capital position is therefore extremely constrained.
The company through its 80% indirect investment in Premier Asia holds an interest in the Licence. Four gold prospects have been identified in the Licence area which is in Northern Tien Shan (about 80 km southwest of the capital, Bishkek). These prospects are early stage and current losses attributable to the asset as of the audited accounts of Premier Asia dated 31 December 2013 are Kyrgyz SOM 21,131,303. Significant additional  legal, political and social work needs to be carried out in the UK and in the Kyrgyz Republic for the Company to gain safe access to the Licence. There can be no guarantee at this point that safe access will ever be achieved.

The local staff and contractors of Premier Gold Resources have been subjected to both physical and verbal threats from section of the local community opposed to drilling on targets identified by Premier’s exploration programme on the Cholokkaindy licence area in Kyrgyzstan. These actions have prevented the Company from accessing the site over the last 30 months and from progressing the project further.
Premier has been trying unsuccessfully during this period to reach an agreement to facilitate safe access to the licence area. This has included repeated meetings with a wide range of stakeholders, including the Kyrgyz Government, regional and local administrations and residents of villages in the vicinity of the Cholokkaindy licence area. To date, this has not been successful in re-establishing access to the project area.
Further engagement with all stakeholders is required to attempt to move towards a solution but there remains no guarantee that any future negotiations will prove positive and even if the are successful tha timeframe of access remains uncertain. Premier has informed ACA Howe that the Company does not have funds available to undertake legal process or arbitration as this required the placing of significant bonds which are beyond the Company’s ability to pay.
Although significant expenditure has been incurred on the project to date in the Kyrgyz Republic and UK, this past outlay cannot be regarded to have a current value in a climate where safe working access to the mineral exploration project area is not possible to the Company (Or any associated organisation).
At this time due to lack of safe access, it is not considered to place a current valuation on the Cholokkaindy licence area. ACA Howe is of the opinion that at the current time, and whilst there is no reasonable likelihood of accessing the licence area in the foreseeable future, the Cholokkaindy licence area has no value.

The Company’s proposed new Investing Policy is to invest in and/or aquire companies and/or projects within natural resources and energy sector with potential for growth and income. The Company may also directly apply for new exploration licences or invest in existing licences. It is anticipated that the geographical focus will primarily be Europe, however, investments may also be considered in other regions to the extent that the Proposed Directors consider that valuable opportunities exist and returns can be achieved.
The proposed directors expect that investment will typically be held for the medium to long term, although short term disposal of assets cannot be ruled out if there is an opportunity to generate an attractive return for Shareholders.
The Directors believe that the Group’s success is highly dependent on the quality and loyalty of its employees, directors, officers and consultants. To assist in the recruitment, retention and motivation of high quality staff, as necessary, the Company must have an effective remuneration strategy.

Critical evaluation and discussion of the motives and issues of CSR and its impact and connection with strategic change.

This essay will critically discuss and analyse the significance of corporate social responsibility (CSR) in business management, its motives and issues as well as CSR connection with strategic change. The link between CSR and sustainability plan in business has a particular role in management operations. Each of the below discussed theoretical standpoints make an important contribution to the understanding of CSR financial and societal purposes. A number of business examples from Google, McDonald’s, Lego and H&M and others support the given arguments.

Corporate Social Responsibility or CSR has been defined and criticized by many strategists globally. Kotler and Lee (2005) described CSR as a commitment to improve community well-being through discretionary business practices and contribution of corporate resources. In 2015, CSR has been referred to companies taking responsibility for their impact on society and it is increasingly important to the competitiveness of enterprises. CSR can bring benefits in term of risk management, cost savings, access to capital, human resource management, customer relationship, and innovation capacity. (European Commission, 2015) Besides, CSR has a variety of business tactics and strategies which concern about environmental issues, practice philanthropic activities or ethical labour practices. Yet another definition of CSR suggests that it could be used by firms in order to get more support and awareness of politicians. Political CSR via philanthropy is the best way for politicians to become notable and gain respect from society, e.g. Clinton Foundation. Corporate Social Responsibility is especially valuable in building up the company’s image and relationships with political representatives as well as to establish a positive reputation within the business. (Hillman, Keim, Schuler, 2004) Nowadays, many SMEs and MNCs have a lot of interest in using CSR strategy as it can lead companies to success by increasing sales volume and brand awareness. Good business examples of CSR implementation has been demonstrated by the world’s well-known Google, Microsoft and The Walt Disney Company which were named as the top three CSR winners by Reputation Institute in 2014.

Corporate Social Responsibility plays an essential role in business growth and takes responsibility towards the community and environment (both ecological and social). Potential benefits of implementing a CSR approach were investigated by “The Economic Times” survey in 2013; it has been revealed that about 80 percent of executives have a CSR policy within their business strategy as it helps to improve their ‘general corporate reputation’. Google has been firmly committed to philanthropy activities orienting on the global challenges of climate change, education and poverty alleviation. For example, Google Maps launched China’s State Bureau of Surveying and Mapping with satellite pictures of earthquake-affected areas to better support and direct rescue efforts. Also, donation program Google Grants has supported hundreds of organisations and societies like China Red Cross, China Youth Development Foundation, Help Fight with Ebola and many other voluntary contributions to the community. This helped Google to differentiate from its main competitors and enhance relationships with customers, suppliers and networks worldwide. It is generally recognised that CSR approach helps business to save money, therefore increasing overall profits. For example, McDonald’s takes CSR very serious. They use energy saving equipment, low energy LED bulbs and recycle cardboard boxes as well as turn vegetable oil into biodiesel used by delivery trucks. Cost saving factor is one of the most important benefits in social responsibility thus creating a win-win proposition for both shareholders and society that moves company forward. Another benefit of CSR is that it has a positive impact on employee’s view of their employer. Unilever, a multinational consumer goods company, continues to train their employees online through Learning Management System (LMS) which provides lots of learning programs in more than 20 languages in 100 countries. By doing this, Unilever motivates and inspires potential employees thus creating pathway to their future career development. According to survey findings, 80 percent of respondents would prefer working for a company that has a good reputation for environmental responsibility. (Cooper and Wagman, 2009) It is also interesting to mention that Tom’s Shoes, a Californian company, donates one pair of shoes to a poor African child in need for every pair a shopper purchases. In turn, TOMS Company invests in their employees by providing a variety of benefits such as Paid Family Leave, Life Insurance, fitness and wellness classes. Another positive aspect of CSR states that innovation and corporate social responsibility are closely related concepts that bring benefits to organisations. LEGO responded to its financial crisis by focusing on innovation products; the creation of new bricks that children would buy based on their passion for the movies rather than for LEGO itself. By doing this, LEGO has been growing sales at 24 percent per year every year and growing profits at 40 percent per year every year for the last five years. (McKendrink, 2013)

Having considered the motives of doing CSR approach within the business industry, it is also reasonable to discuss and analyse the issues area. In the improperly managed business strategy, the implementation of CSR approach can cause a risk situation that creates a negative outcome for any corporation. For example, Bayer, an international chemical and pharmaceutical German company, has been accused of having a number of hazardous pesticide ingredients in different products in various quantities. These products mainly contained toxic and had a dramatic influence on bees as well as on many other insects, although the company positioned themselves as eco-friendly. Undoubtedly, social responsibility should result in positive outcomes for both the business and the society but, like an iceberg, most CSR activity is invisible. It is always an active attempt to increase corporate domination rather than simply a defensive ‘image management’ operation. (Miller, 2003) Some strategists see corporate social responsibility as a Public Relation activity that helps business firms to build brand loyalty and develop a positive relationship with key customers. In 2004, the Guardian newspaper article stated that CSR activity is often used as a PR tool and there is no coincidence that firms in areas such as oil, tobacco or mining are its biggest public leaders. Another criticism of CSR claims that this approach has an underlying financial motive so that the company benefits even more than the charity. Paul Polman, the CEO of Unilever company, launched sustainability living plan (USLP) for ten years with the aim to double the size of the company while reducing the environmental impact. The outcome is a virtuous circle where the firm’s stock value increases and its access to investment capital is eased. It is also important to note that many business enterprises, particularly with CSR approach, often save money on labour cost. For instance, H&M’s scandal in Cambodia in 2010 has raised lots of concerns about their factory employees who were paid so little that people did not have enough money for living expenses and food. Besides, the company has been also accused of hiring suppliers with bad working conditions what damaged H&M brand image and the real CSR purposes has been revealed to the public. The last but not the least disadvantage of corporate social responsibility is associated with costs for environmental and waste management programs, employees training schemes and overall investment into local societies and communities. Companies spend lots of money every year on Corporate Social Responsibility just because it is a valuable component in building trust and support from stakeholders. Consequently, it is possible to claim that CSR concept is a strategic management tool that drives the strategy change in organization’s structure in order to avoid a failure or decrease in sales volume.

Corporate social responsibility or CSR is an essential part of management that examines ethical issues in every aspect of the business. Social responsibility is widely recognised as one of the main elements of the strategy formulation process thus making strategic decisions which have economic and social consequences. Due to the internal and external environmental changes, business objectives should be reviewed over time, and they should be reconsidered in relation to the CSR strategy. Todd Ballowe (2009) defined strategic corporate social responsibility as a strategic approach when companies can determine the activities they have, the resources to allocate to being socially responsible that will strengthen their competitive advantage in the market. Indeed, effectively managed CSR programs can create major benefits in terms of reputation, returns, the motivation and loyalty of employees. Today, the growing popularity of sustainable development or environmental sustainability topic has become a very common concept for many business leaders in different industries. In fact, the combination of both the CSR and sustainable development policy is partially the same scheme which solves a number of global problems such as animal protection, pollution or poverty meanwhile earning trust, respect and loyalty of customers. Balogun and Hailey (2008) emphasize the fact that technological change is pushing many firms to adopt new technologies and change the way they both work with their suppliers and customers. The above mentioned example from LEGO shows that innovation and sustainability development helped the company to adapt to external and internal changes, and stay closely-connected with its customers. On the other hand, corporate social responsibility not always go right and a number of CSR failures has been noted. For instance, Gazprom Neft (the largest Russian extractor of natural gas) and Gap (textiles firm) have been named as the worst businesses for human rights and environment damages by annual Public Eye Awards in 2014. Having a CSR approach since 2010, Gazprom still has poor records on safety, environment and transparency. (Bertini, 2014) When mentioning corporate social responsibility, the triple bottom line framework (TBL or 3BL) is important as well. The 3BL is an accounting framework that includes three different dimensions of performance: environmental (planet), social (people) and financial (profit). A lot of businesses and non-profit societies such as FedEx, Tesco, Nike or small shops like Jessica Alba’s non-toxic baby product company, have implemented the triple bottom line sustainability framework in order to analyse their performance, and a similar approach has gained currency with governments at the federal, state and local levels. (IBR, 2011) In addition, as part of an overall CSR plan, the three Ps (planet, people, profit) provide tangible benefits in the form of employee retention and engagement.

Corporate Social Responsibility, abbreviated as CSR and known as corporate citizenship, has been widely discussed and criticized by many strategists and management gurus. CSR can bring a number of benefits to a company such as cost savings, positive reputation and trust in the minds of consumers, brand awareness and increase volume sales. Hundreds of organisations and societies are financially supported by many well-known companies such as Microsoft, Google and Unilever. CSR brings the best to the society and environment thus making a profit. It has become a strong and necessary part of business strategy and makes organisation more competitive. However, corporate citizenship always has been criticized due to its personal corruption motives or high investment cost into waste management and training schemes. Despite these criticisms, CSR popularity still remains high. Corporate social responsibility is a strategic management tool that can improve the current business strategy and move the company forward.

Online survey for males only. Dissertation Project.

survey

If your a male and between the age of 18 – 24, could you fill in this survey for me as part of my dissertation project. I’d really appreciate it.

https://www.surveymonkey.com/s/92XVTSY

The internationalization of the small-to-medium sized enterprises (SMEs): motives, barriers and the Uppsala model

1.0 Introduction
The purpose of this paper is to critically examine and discuss the motives and barriers of SMEs going international and its Uppsala model and principles. In today’s fast-changing business environment, internationalisation has become an essential aspect to competitive advantage of enterprises and, meanwhile, the most challenging in realisation and adaptation to changes. In order to understand the key driving factors and major challenges, the term ‘internationalisation’ can be interpreted and defined through many viewpoints. The rest of this paper debates about the Uppsala model’s suitability to internationalisation process of small-to-medium enterprises.
2.0 Internationalisation and SMEs
A number of theorists has described internationalisation “as the process of transforming a domestic marketing management system into an international marketing management system over time.” (Clarke and Wilson, 2009, p.8) It is further assumed that internationalisation takes the form of the internal management strategy that creates the firm’s structures and operational processes in order to adapt to the international environment and to expand beyond the local market. Lots of traditional companies that have been operating for a long period of time went international. Before stepping into foreign countries, they step by step reduce the potential risk of entering new markets, try neighbouring or physically near markets. In fact, global competition has forced SMEs to seek new markets and to speed up the product cycle development. This, in turn, creates new and difficult challenges for international managers as the choice of direction is infinite. McDonald’s, the global food service retailer, successfully went international in 1960 in order to take competitive advantage over its main rival Domino’s. McDonald’s restaurant has a different menu in each country as they try to adapt their menus to different tastes and preferences as well as local cultural traditions all across 190 countries.
According to Rugman and Collinson (2009), SMEs definitions varies in different countries as, for instance, in the United States, SMEs have up to 500 employees, while European SMEs have around 11 to 200 employees and sales of $40 billion. Most of these companies have less than $5 million annual sales but they are able to compete with rivals of all sizes and perform operations effectively that some multinational companies cannot do. It is noticed, that the governments often provide financial support for SMEs in order to support export performances and connect to international markets. The German government representative has signed an agreement to sponsor small and medium enterprises with $2.5million in Sub-Saharan Africa what will improve competitiveness and raise demand. (Jackson, 2014)
3.0 Motives for Internationalisation
According to American Marketing Association (2007), the research shows that the key motive of internationalisation is brand identity and the associations of luxury product image, market appeal, lifestyle perception, niche market opportunities and global relevance. Similarly, Clarke and Wilson (2009) agree that seeking business growth opportunities is an obvious motive for SMEs to go international. They also state that the most important drivers of internationalisation are the opportunity to control a competitive advantage, the desire to spread geographical risk and the need to follow consumers into foreign markets. Besides, the term internationalisation can be associated with the export and import, thus, Albaum and Duerr (2008) believe that exporting is still the most common tactic for manufacturers to run business abroad what help to achieve profit-oriented goals like return on sales, stability, investment or profit maximisation and non-profit objectives such as maintaining employment, customer service excellence and management expansion. In turn, Wall et al. (2010), suggest three categories of ways for a firm to go international: export-based method, non-equity methods, and equity methods. “Exporting is the business activity of meeting the demand for goods or services in foreign markets.” (Clarke and Wilson, 2009, p.5) It is the most common and the oldest way in which SMEs begin to go international. In 2010, Hannahen identified that small enterprises account for 30 percent of all the U.S. exports what is $300 billion per year. Also, the fastest growing segment of the United States exporting firms, comprising 65 percent of all U.S. exporters, are firms with 20 or fewer employees, what demonstrates that size is not an essential requirement for success in global markets. According to Koksal (2006), exporting has become a significant internationalisation strategy for both companies and national economies in the world markets. It is possible to state that another key reason for small and medium-sized enterprises (SMEs) to go international is profit, especially if a firm has innovative technology, unique products and other advantages to expand internationally. This lead to another essential motive – to strengthen competitive position and weaken the rivals. Kotler defined competitive advantage as ‘the company’s ability to perform in one or more ways that competitors cannot or will not match’ (2012,p.311) and Porter emphasized that strong local competition frequently benefits a national industry in the global market and companies in a competitive environment produce qualitative products more efficiently. In 2012, the European Commission has agreed to support small and medium sized enterprises in the EU and US in order to access markets in Atlantic. They also believe that internationalisation for SMEs mean faster growth, more workplaces, higher wages and cross-border partnership development in the global market. It is interesting to note, that 41% of SMEs admitted that the main reason for entering the international market is the access to new markets, while other 31% of SMEs named the access to know-how technology and diversification of product or service portfolio as the main reason to increase international business activity. (Source: HIS Survey, 2012) In addition, Albaum and Duerr (2008) added that new markets help a company to use better its production volume, to extend the product life cycle, to increase competitiveness and even gain tax benefits.

4.0 Barriers of Internationalisation
It is generally accepted that most organisations, particularly SMEs, face with a number of barriers and challenges when accessing international markets. Finance limitations and a lack of physical resources has been noticed as a leading barrier to the internationalisation of SMEs. Additionally, tariffs on imported goods will discourage trade and reduce economic welfare. (Wall, et al., 2010) In a situation of market turbulence, it is believed that limited information of potential markets and a lack of technical knowledge can be barriers to export and ability to stay in a foreign market. Based on the literature, ‘barriers are important because of the impact they have on the behaviour of potential and actual exporters at various stages of internationalisation’ (Albaum and Duerr,2008, p.27) Rugman and Collinson (2009) suggested a number of international barriers to trade: price-based barriers, international price fixing, quantity limits, non-tariff barriers, financial limitations and foreign investment controls, meanwhile, Wall, Minocha and Rees (2010) agreed and added that inadequate quantity of and/or untrained staff for internationalisation to SMEs to be the key barriers to access the foreign markets. Crick (2007), in turn, states that SMEs face difficulties with locating adequate representation in target export markets, while Kneller and Pisu (2007) concluded that finding an appropriate foreign market partner is a main barrier to the internationalisation of the small and medium enterprises. Due to the geographic location, time zones and cultural differences, there is a high probability of risk in finding and contacting the right business partner or potential customer. Another barrier that may arise is foreign exchange risk what is a very real concern for financial managers. Because of currency exchange, SMEs may face with financial losses when carrying out international trade operations and, also, may affect the prices of export and import. Research of 500 UK small-medium enterprises showed that firms were more aware that ever of the need to be prepared for an increasingly expansive range of risks, such as high energy and operating costs, growth in UK economy and the Eurozone crisis. With this knowledge at hand, it is reasonable to state that finance officers in SMEs do not usually understand the importance and possibility of foreign exchange risk. In a later study, Gelis (FT, 2013) added that ‘currencies outside the usual dollar, euro, sterling markets – raises even more potential risk’ as fluctuation in these currency standards can either increase or decrease the returns linked with foreign investments. Although Rugman and Collinson (2009) argue that tariffs (import, export and transit) continue to be one of the most commonly used barriers to trade. Authors also include non-tariff barriers which include quotas, voluntary export restraints (VERs), subsidies, exchange controls and other standards and formalities. Such barriers, like taxes or tariffs, reduce the demand for the product while increasing the price to the customers.

5.0 The Uppsala model
The majority of internationalisation theorists provide a number of various internationalisation models, for example, Hymer’s model (1970) mostly focused on the early stages of firms’ growth and domestic-market approach, while Vernon (1966) developed the internationalisation model based on monopolistic theory of international production. Both of these classic models are still used in practice, however, according to Hegge (2002), the Uppsala or stage-theory model differs from other models and the reason for going global is that firms internationalise because other competitors in their national network internationalise as well what makes it dependent on each other. Uppsala model considers internationalisation as an incremental process of acquisition, integration and the use of knowledge about foreign markets. A basic theory of the Uppsala model is that lack of knowledge about foreign markets is a key issue to go international, however, this issue can be overcome via information about foreign market environments. The more data and awareness the firm has about a foreign market situation, the lower the perceived market risk will be and, thus, the higher the actual investment by the firm in that market supposes to be. The main concepts of the model are market commitment and knowledge, commitment decisions and recent business activities. All tangible and intangible assets that a firm accumulates in a particular geographic market structure its market commitment. (Forsgren and Hagstrom, 2007) The original model was introduced by Johanson and Wiedersheim-Paul (1975) who distinguished the Uppsala Internationalisation model into four steps of entering a foreign market: no regular export; export activities; independent representatives and subsidiaries; establishment of production/ manufacturing facilities. The authors suggest, that internationalisation process often starts in foreign markets that are physically close to the home market, for example, England and Ireland or Belgium and the Netherlands. Similarly, companies are more likely to internationalise with countries of similar language, culture, political similarities and educational systems. It has been found out by Aerts (1994), who examined the internationalisation process of Belgian SMEs, that 62 per cent of the companies exported straight to neighbouring countries what made it easier for them to control the resources and gain knowledge of the market situation. It is generally believed, that most of the firms start its internationalisation through exporting to the target country via different agents or representatives. For instance, Boxman, Swedish CDs website, decided to internationalise quickly through local country manager, who in turn hired a number of people for customer service and other operations in order to ‘build a brand name and to exploit first-mover advantages’ (Forsgren and Hagstrom, 2007, p.295) However, there are some theorists who argue that the Uppsala model is too deterministic and does not take into account interdependencies among various country markets. Johanson and Wiedersheim-Paul (1975) pointed out that a major criticism of the stage theory model is that it is based on the mentioned research of the export behaviour of four Swedish companies and research on Australian firms. It is interesting to note, that the model was initially introduced as understanding actual behaviour of companies, rather than suggesting suitable standards for how to invest abroad. Further, authors criticised that the Uppsala model deals with only the early stages of internationalisation, particularly for SMEs starting their international process abroad. Most of small-medium sized enterprises (SMEs) have no international experience and knowledge, as they are usually local businesses with limited international skills. Consequently, the decision to go internationally is quite risky because of the essential investment required to internationalise, insufficient management skills and lack of brand recognition. For such firms, the Uppsala model provides this essential experience and increases a level of knowledge about the international markets as well as evaluates the potential opportunities and threats. Thus, the Uppsala model decreases most of the disadvantages that SMEs meet when going internationally.

6.0 Conclusion
From examination of the existing literature, it has been argued that a number of different reactive and proactive motives for internationalisation of SMEs has a particular impact on future business growth and profitability. Small to medium-sized enterprises have to follow certain strategies in order to stay internationally successful (Hegge, p. 170) and gain competitive advantage. The reasons to internationalise are mostly market driven and less resource and efficiency driven, which signifies that market access, growth and access to new technologies are very important. (Hegge, p.173) It has been discussed that geographical and psychical distance plays a significant role for a firm when selecting a number of countries to go international. On the other hand, a limited company resources, lack of managerial skills and market knowledge are the top barriers to SME internationalisation. Authors concluded that there is a high level of risk in financial operations across different countries due to the unstable economic situation and fast changing business environments. Earlier studies of Uppsala model have shown four stages referring to the process of internationalisation and identified exporting as a starting point. However, the stage-theory model was criticised by a number of theorists that the series of internationalisation strategies are based on effects of learning and experience of Swedish and Australian firms what makes it irrelevant to nowadays situation. According to the discussion above, it is possible to conclude that internationalisation gives a better and faster business growth for a firm and the ability to double its revenues, however, SMEs internationalisation is a tough process and has a number of barriers which can be strategically overcome and well managed.

Strategy Process, Context, Content

Critically evaluate the importance of strategy process and strategy context in determining strategy content.

Nowadays, the business industry changes rapidly, and for the company to succeed in this environment, it is vital to manage day to day business activities, and spend time monitoring and adapting to the changes that are happening in technology and business. The purpose of this essay is to critically examine the importance of strategy process and strategy context and its connection with strategy content. Traditionally, these are the three characteristics of strategy that can be identified in everyday strategic problem situation. This essay also involves a number of different viewpoints of strategic management gurus and provides several well-known industry examples in order to support the given arguments.

Alfred D. Chandler (1963), defined strategy as the determination of the basic long-run goals and objectives of an enterprise and the adoption of courses of actions and the allocation of resources necessary for carrying out these goals. In other words, strategy is a long-term direction of any business organisation with a various set of day to day activities. Strategies generally exist at many different levels in any organisation what helps to ensure a specific place in the market and tend to follow the business direction. Global companies such as Apple, Amazon, IBM and Coca-Cola established its position in a particular industry relative to competitors by implementing specific strategies and tactics that led to greater income for their business. Due to the constantly changing nature of business environment, Henry Mintzberg distinguished strategy as either deliberate (or intended) and emergent which are both important. Objectives and strategy may suddenly change in response to environmental changes or because the business organisation itself has changed. The launch of Apple’s iPod in 2001 is a great example of success over Sony’s Walkman based on deliberate and emergent strategies. It is interesting to note, that 86 per cent of 40 business leaders admitted to having no consistent plan within their business but set leadership as the starting point of strategy. (Sunley, 2011) Some strategies may be planned at least at their first steps, but many more just simply emerge in an organisation without being consciously intended or being deliberate acts. (McGee et al., 2005) For instance, Google Company does not have a consistent five year strategy plan as the focus is primarily on what is innovative and exciting to their consumers in a particular point in time.
Having considered what strategy is, it is reasonable to discuss and analyse the meaning and importance of strategy process. According to Johnson (2014), strategy process examines how strategies are formed and implemented. It is argued, that the process could be divided into four steps of actions – identifying, diagnosing, conceiving, and realising. From the managers’ perspective, it helps to monitor and evaluate the whole picture of the strategy. In 2010, Unilever, a global FMCG company, has launched the Sustainable Living Plan with the aim to improve people’s lives and growth sales by 2020. Across 190 countries, Unilever employees are monitoring the progress of business plan regularly. Managers also measure whether the activities being taken in the organisation are in line with the decision selected and whether the outcomes are in line with what was expected. In today’s quickly moving market situation, strategy basically consists of a set of micro decisions made by individuals in the organisation every day. For many successful companies, environmental values are now becoming a fundamental part of their cultures and management operational processes. In that case, in order to run a logical and clear strategic process within any business, it is critically vital to understand the nature of the internal and external environment in which an organisation operates.
The set of circumstances under which both the strategy content and strategy process are determined is referred to as the strategy context. (De Wit, 2014) It refers to both the internal and the external contexts of organisations. A thorough industry analysis, known as external environment, makes sense of how strategies have to fit with culture and surroundings by using concepts like SWOT, PESTEL and Porter’s Five Forces. The internal environment is composed of organisational culture, human resources and management skills of the workforce that are significantly impact on the inside comfort of organisation. For any business to grow successfully, all managers must be able to forecast, identify and deal with the internal and external environmental change. The techniques in which managers interpret the environment and instigate changes in their organisations is a central part of the strategy process. (McGee et al., 2005) However, if an organisation reacts too late to environmental changes, there is a high risk of failure. There are two causes for strategy fail: not understanding the environment in which the organisation is going to operate and inability to adapt to unexpected changes in the environment such as financial crisis or technological innovations. For instance, Tesco plc, a multinational grocery and retailer, left its loss-making business in the US and Japan market in 2011 due to the lack of knowledge and research of external environment. Besides, almost all well-known US Internet companies such as Yahoo, Google, eBay or Facebook met with failure in China in the last ten years. The reason was that China is different in culture comparing with the US. In eBay’s case, the company did not have enough awareness about the market situation and customers’ demand what made it difficult to compete with the rivals like Alibaba and Taobao. Unilever, in turn, is a successful example of how the company entered many low- and medium- income countries by using environmental strategy and adapted their products to each region market. Matching the organisation to its environment requires a more proper structure, different schemes and an appropriate organisational culture, which are aspects of strategic management. In fact, both environments has an important impact over the development of a company’s strategy and its degree of success.
The last but not the least strategy dimension is strategy content. De Wit & Meyer (2014) defined content as a set of combined decisions and choices that lead a company into the future. Its aim is to create organized, meaningful, engaging and sustainable content in order to connect with the audience. Content strategy development requires company, customer and competitor analysis what helps to stay ahead of competition and increase sales. In 2013, Coca Cola launched a new campaign called “Coming Together” with the aim to push ‘no sugar coke’ to the US market. Coca cola rose the issue of obesity among the youth and communicated with them through social media, seminars, web and direct mail providing useful instructions of how to fight with obesity. Indeed, Coca Cola delivered the right content to the right user at the right time. Content management is all about the delivery of the exact information, product or service to the target audience in all the places across each stage of the buying process. For example, the creation of the website with a powerful and easy in use content, makes website visitors’ and internal managers’ life as easy as possible. Many airlines companies like British Airways, EasyJet or Ryanair, provide a number of options when booking the flight online: hotel reservations, car rental, transport or parking services. It is possible to conclude, that marketing is a component of strategy content because it has a direct effect on sales and profitability of any business and helps to engage with the customers daily.

The essay was written to highlight that the way in which the strategy process is organised have a significant impact on the strategy content, similarly as the content of the current strategy strongly influence the way in which the strategy process will be led in the future. (De Wit, 2014) Different strategic management theorists concluded that there are many definitions of strategy and numerous ideas of how strategies should be implemented. A number of well-known industry examples from Tesco, Coca Cola, Apple, Google, Unilever and eBay and other companies supported the above mentioned arguments. I agree with a statement said by Mintzberg (2003), that the success of a strategy depends on doing many things well and integrating between them. If there is no fit among activities, there is no distinctive strategy and little sustainability.

Unilever company context analysis

1.0 Introduction
The purpose of this report is to provide a thorough context analysis of Unilever industry and to understand the key factors in its business and communication environment that are likely to influence a brand as well as its current long-term objectives. This report also examines Unilever previous experience which has a specific impact on the development of a strategic integrated marketing communication plan.

2.0 External Context
2.1 PESTEL framework

This section introduces the well-known PESTEL framework which analyses the broad macro-environment of Unilever organisation.

Political
• Obey the law
• Respect human rights
• Good corporate governance
• Accept international principles Economical
• Economic downturn
• Exchange rate
• National and global interest rate
• Inflation
Social
• Employee value
• Improving health and well-being
• Enhancing livelihoods
• Long-term partnerships
• Products sold in 190 countries Technological
• The latest science & technology
• E-business via internet
• Installation of pallet storage system
• €1 billion spent on research & development in 2012
Environmental
• Environmental risk assessments
• Minimize waste
• Reduce environmental impact
• Climate change Legal
• Legal structure
• Food legislation
• Greenhouse Gas Strategy

• Political
Unilever’s political forces shape the use of marketing communication by following the law and human rights, accepting international principles when having partnership with foreign representatives. Unilever businesses are governed by laws and regulations aimed to certify that products are safely used for their intended purpose and that labelling and advertisements are honest and not misleading. Unilever is also regulated by data protection and anti-trust legislation. Important regulatory bodies in respect of Unilever’s businesses include the European Commission and the US Food and Drug Administration. Unilever makes sure that products, manufacturing processes, marketing materials and activities meet the above-mentioned laws and regulations.
• Economical
Since the financial crisis in 2009, Unilever, as well as every business organisation, faced with taught market conditions and group turnover fell 2 per cent to £9.6bn, particularly in China. (Bradshaw, 2014) Unilever showed poor food results in its first financial quarter in 2014, affected by the late timing of Easter. For example, Ben & Jerry ice cream and Knorr stock cubes announced overall food sales growth down by 1.7% and underlying volume growth down by 2%. (Robinson, 2014) Despite all these facts, Unilever seems to operate quite well in nowadays competitive environment, as value and volume growth for the company were both 1% ahead of its markets. Consequently, Unilever is gaining market share in 60% of its businesses. (Seeking Alpha, 2014)
• Social
Unilever employs 174,000 people from different parts of the world who work to create a better future for 7 billion people on our planet. By this, Unilever raises the demand of its products in the developing and emerging markets. Following the USLP goals, Unilever will help more than a billion people to improve their well-being and enhance the livelihoods as well as reduce environmental impact by 2020. The company is working hard to improve hygiene and bring a better nutrition to people in Asian and African countries.
• Technological
Unilever China is one of the largest corporate companies owning more than 400 brands such as Lipton, Wall’s, etc. Due to the higher demand every year, Unilever’s warehouse faced with storage capacity problems. The innovative installation of pallet storage system improved picking efficiency and increased number of storage space. Unilever believes that safety is an essential element of a successful and sustainable business. The SEAC (Safety and Environmental Assurance Centre) applies the latest technology and science for environmental assessments. In 2000, Unilever spent their budget on IT in order to enter e-business as well as to enrich brand and market communications through internet. Today, Hellmann’s, the mayonnaise brand owned by Unilever, launched the WhatsCook campaign in the South American countries, reaching the audience of 32million people who use WhatsApp mobile application. (WARC, 2014)
• Environmental
The Unilever Company designed Environmental Management system, based on ISO 14001, which help to meet customers’ needs from an environmental perspective via continuous improvement in manufacturing activities worldwide. (Appendix 1) Unilever provides a number of various risk assessments: consumer and occupational safety, environmental safety, non-animal testing in partnership with other scientists globally. The launch of Sustainable Living Plan in 2010 drives the delivery of the environmental impact reduction and enhanced social impact. For instance, Unilever has reduced the number of layers and the thickness of the sachet materials used for its hair products in South East Asia and planning to so the same in Pakistan, India, and Bangladesh. (Source: unilever.com) The climate change also has a specific impact on business environment. Eliminating waste is one of the main goals for Unilever. In December 2013, the company achieved zero non-hazardous waste to landfill across its factories by recycling 530,000kg of plastics.
• Legal
Unilever PLC and Unilever N.V. both have different shareholder constituencies and shareholders cannot exchange the shares of one company for shares of another. The company has a number of agreements: the foundation agreement, the equalisation agreement, and the agreement for mutual guarantees of borrowing.
2.3 Key stakeholders
External management communication is not confined to senior managers as all managers who have external-facing elements to their job communicate with stakeholders, who form images of the organisation as a result of what is said, how it is said and the impact it has on others. (Fill, 2013) Key stakeholders typically come from inside of Unilever Company and are those who have put contribution to its business activities every day. By engaging with their stakeholders, Unilever builds reputation, earn trust and develop long-term relationships what helps business to growth successfully. The key stakeholders for Unilever are governments and intergovernmental organisations (Oxfam, Save the Children), customers, suppliers (Boots & Superdrug store) and investors (Norges Bank), society organisations, employees and other individuals who create a supportive environment and face with the challenges in order to strengthen sustainability. For example, Unilever has actively put reputation right as its centre by implementing its Sustainable Living Plan what enables to take the position of the world’s most sustainable business and broaden its reputation with their stakeholders ahead of any possible concerns it may occur in the future.

3.0 Business context
3.1 Corporate & Marketing strategy and plans
Unilever itself has always been a purpose-driven business with its current strategy called “Compass strategy” (developed in 2009) which aim is to make sustainable living commonplace and, meanwhile, to double the business size, whilst decreasing environmental footprint and increasing their positive social impact. Unilever produced a business model map based on “Compass” commitments. (Appendix 3) According to the Sustainable Living diagram, Unilever values its brands and a strong connection with the customers as it has a direct impact on decision-making process. No organisation or business can operate without right people and Unilever is not an exception. They believe that company’s success also lies on skilled and motivated employees who bring the best to the business operations. Unilever corporate strategy also underpins the operation processes so that every customer in low- or middle- income country can afford a particular product for a reasonable price.
Unilever marketing strategy is “Crafting brand for life” consisting of three key pillars: firstly, Unilever values its customers and allows them be at the heart of everything. For example, Dove’s campaign for Real Beauty changed existing stereotypes about beauty. Thought the work of the Dove Self Esteem Project, Unilever/Dove and other business partners created resources for the youth to help inspire them to feel good about their appearance and to reach their potential in life. (Marketing Magazine, 2014) Secondly, Unilever brand products have a clear purpose with a clear point of view. They make sure that people are aware of intended purpose of their products and are easy in use and understood. The key to Unilever’s business is to understand what people actually do with their products. Third marketing pillar is that Unilever shares emotions and magical brand experiences across the whole customer path via collaboration, cooperation and crowdsourcing. Unilever Malawi together with governments, health agencies and others, has showed the easiest way of washing hands to 130million people worldwide by producing the emotional video. Lifebuoy “Help a Child reach 5” soap advertisement has reached 6 million views in YouTube.
By 2020, Unilever is expecting to achieve its Sustainable Living Plan goals and objectives in order to drive business growth and help the world to become better. Unilever is planning to help 1 billion people to improve their health and well-being mostly in developing countries by changing hygiene habits as well as sourcing 100% of its agricultural raw materials. The main aim for the future is to produce and deliver high quality products and services without increasing environmental impacts.

3.2 Brand Analysis
According to Dahlen et al. (2010), every organisation, in every country, in every context now has a brand-building imperative instilled into their corporate strategy and modus operandi. The brand works closely with consumers’ consciousness and has an emotional appeal to the buyer during the shopping process online or in store. Unilever brands play a significant role in helping to achieve their sustainable living goals of helping more than a billion people improve their health and well-being, halving the environmental footprint of the products and sourcing 100% of agricultural raw materials sustainably. Food, personal and home care brands that Unilever owns, shape and form the Unilever brand as a whole every day. Farr (2006), determined that the top brands are described by four factors. They are all strong in terms of innovation, clear values, great customer experience and strong sector leadership. (Fill, 2011) For instance, Unilever scientists have demonstrated the way to do ice cream healthier and tasty by adding ice structuring protein which is lower in fat, sugar and calories. The launch of Unilever/Dove beauty campaign in 2004 with seven brave women showing their natural beauty, helped to build a positive relationship and trust with their customers. Valuing the worth of brands and developing the brands’ identity and equity, Unilever earns its trust, reliability and loyalty from their customers and, meanwhile, strengthen its position within the competitive market. From the semiotics perspective, each icon within the Unilever logo represents everything they do and value in the business: clothes, ice cream, spice and flavours, a bowl of food, recycle symbol, DNA and plant signs, etc.


4.0 Internal context

4.1 Organisation Corporate Identity
Nowadays the role of the employee within the branding process, and through their interface with consumers and other stakeholders, is recognised as critically important. (Fill, 2011) Unilever successfully connects with its different audiences inside and outside of organisation. Internally, the Unilever Communication team ensures that their stakeholders stay up-to-date about the business’s day to day activities. In 2011, Unilever Australia launched the new “Head of Sustainability” campaign aimed at understanding of the company’s Sustainable Living Plan amongst employees across New Zealand and Australia Unilever’s markets. (Hart, 2011) In addition, Unilever Hindustan started to empower its employees to become more involved in marketing, innovation and distribution areas by acquiring a “consumer license” to work with its brands, which requires 50 hours of communication with buyers. (WARC, 2012) The firm also runs the “Consumer Shoes” scheme where employees can trial new products. Communication between members at Unilever, wherever they are situated geographically, is undertaken by DRIP elements: to differentiate employees/groups and be persuasive, to provide information and to reinforce internal marketing communications towards corporate goals.

4.2 Culture, Value, Beliefs
Unilever is a multinational consumer goods company which operates in 190 countries such as the United Kingdom, Egypt, Africa, the US countries, Australia and others. It recruits hundreds of valuable and skilled professionals in every country and Unilever makes sure that all behaviour standards are regulated. In a fast-changing business environment, Unilever brings the value of integrity, responsibility and respect to organisation in order to guide their staff to take actions and make decisions each day. The performance-based reward structure is a good example of how Unilever recognises those who bring the best results and value to the business. Besides, Unilever believes in their future employees and provide the “Unilever Leadership Development Program” (ULDP) for graduates. During 2013, Unilever educated over 54,000 employees in English and other 14 languages. According to USLP, Unilever will continue to expand opportunities for women in the value chain by 2015.

4.3 Financial constraints
Unilever faced with high cost of financing, distribution and operations in Nigeria what drove down the profits. The company’s performance in 2013 and 2014 shows that the results are not as good as expected due to the fact that the company battles with high operating costs to remain afloat. (This Day Live, 2014) According to RTE news (2014), emerging markets, which are the key for Unilever business, have taken a dive in recent months, with Brazil sliding into recession, China facing the worst slowdown in 24 years and Russia dealing with Western sanctions over the crisis in Ukraine.

4.4 Agency suitability
Fill (2013) suggests that the marketing communications industry consists of a number of various types of organisations whose aim is to enable clients to communicate effectively and efficiently with their target audience. WPP is one of the world’s top communication services groups which include agencies like OgilvyOne, Mindshare, Young & Rubican etc. In 2010, Unilever has decided to split between three groups of agencies: WPP, Omnicom and Interpublic. In 2014, Unilever has introduced its first corporate television and digital campaign the “Bright Future Speeches” created by Ogilvy & Mather Worldwide, part of WPP. (Source: The NY Times, 2014). A number of agencies, including PR shops Edelman, Weber Shandwick, GolinHarris and digital players such as Profero, Noise and 360i have supported social media and digital marketing for various Unilever brands like Dove, Lipton and Ben & Jerry’s. (AdAge, 2014) Having the long-term relationship with the right agency partners to serve the Unilever business, enables to engage with customers globally in effective and meaningful ways.

5.0 Customer context
5.1 Segmentation characteristics

Unilever does not segment its market according to demographic characteristics as, to a large extent, age, gender or religion are not as important as geographic segmentation. Unilever has set its business in African countries (most of which are low-income) where consumers in Ghana spend just one fifth per capita on Unilever’s products than consumers in South Africa. Unilever strategy is to meet the needs of people everywhere and provide a better livelihood especially in low-income countries. For the brands like Lifebuoy, Omo, Royco soups, Unilever established a concept known as Low Unit Packs (LUP) what made it affordable for African population. The organisation geographically segments its market by continent, country, city, region, and area. Psychographic segmentation involves the analysis of customers’ activities, interests and opinions (AIO). Unilever brands find the best possible way to meet their customers’ needs, satisfaction and ability to influence them to buy particular products. For example, the dramatic results has achieved the Unilever’s Lifebuoy campaign “Help a Child Reach 5” launched in India. Research showed that India has one of the highest rates of diseases like diarrhea what motivated Unilever to improve people’s hand washing habits. Knowing the market AIO, Unilever successfully improved decision-making process of individuals and the diseases rates dropped from 36% to 5%. Unilever also segments its market by customers’ behaviour. It investigates buyer behaviour in term of lifestyle and preferences they have in different stages in their lives. The USLP encourages people to wash their hands with soap, to do laundry at low temperatures and to brush teeth twice a day. By inspiring consumers to accept brand new sustainable products, customers’ behaviour changes according their habits. For example, the Lifebuoy brand communicates to new mothers and links washing hands process with being a good mother, what is a powerful motivation.

5.2 Awareness, Perception, Attitude

Awareness of the existence of a product or business organization is necessary before purchase behaviour can be expected. (Fill, 2013) Unilever raised awareness of Seda shampoo amongst teenagers in Brazil by communicating with them through a mobile campaign. In this situation where buyers experience high involvement and are completely aware of a product’s existence, allowed Unilever to reach their target audience. Perception is defined in terms of how individuals see and make sense of their environment. Unilever/Dove real beauty campaign illustrates how successful they changed the perception of women and force them to rethink, to discuss and discover their own natural beauty. Unilever’s Five Levers for Change approach describes how the organization wants to improve the attitude of customers towards their brands and products. According to USLP, Unilever is trying to change people’s attitude toward the use of greenhouse gas by 2020. For instance, the increasing popularity of dry shampoos (Dove, Suave, TRESemme etc.), especially in the US, encourages people to reduce their use of heated water what also includes energy, water and money.

5.3 DMU characteristics and issues
Unilever, as a large and dynamic organisation with over 400 brands, has a complexity of its decisions in the market place. A large number of people are involved in the purchase processes which are also known as the decision-making unit (DMU) or the buying centre. Webster and Wind (1972) suggested a number of people who structure the buying centre: Users, Influencers, Deciders, Buyers and Gatekeepers. (Fill, 2013) The users of Unilever organisation are both employees and customers. Influencers can be found at any stage of purchasing processes such as suppliers, investors or marketers. The decider is the player who is responsible for choosing the supplier and process management, very often the decider belongs to buyer. Gatekeepers have the ability to control the information of the business organisation, for example, the media centre of Unilever. The main issue is that DMU can vary according to the complexity of the product and the degree of risk.

5.4 Levels of involvement and types of risk
Purchase decisions made by buyers change significantly, and one of the aspects thought to be key to brand choice decisions is the level of involvement a customer has with the product or the purchase process. All the products of Unilever brands, such as Persil, Lipton, Surf or Flora, are normally seen as low involvement as there is a little risk to the consumer. During the decision-making process at a store, the customer perceives ego risk about the particular products. A highly important aspect is that customer wishes to get satisfaction and meet his/her expectations about the product.

5.5 Media usage
Unilever has a range of media activities designed to provide journalists and editors with information for consumption by their audiences. In 2014, Unilever UK advertised its corporate umbrella brand on TV, as part of a global “Project Sunlight” CSR campaign with the aim to raise awareness of hygiene, food poverty and waste. Unilever also communicates with its audience via social media: LinkedIn, Facebook, Flickr, Twitter and Instagram websites. The official company’s website provides a number of press releases since 2001 to 2014 years as well as speeches and interviews. In addition to these key activities, Unilever also use sponsorship as a form of public relations. For example, in 2013, Unilever and Manchester United signed a three year regional partnership in South East Asia (Manchester United, 2013)

6.0 Evaluation, Conclusion
Unilever is an international company which came to the stage it is today. With more than 400 brands focused on health and wellbeing, no company has an impact on many people’s lives in so many different ways as Unilever. The launch of USLP in 2010 is still helping to drive profitable growth for Unilever brands, save costs and fuel innovation. Business is making an explicit positive contribution to personal and environmental issues. The context analysis critically discussed and analysed the Unilever’s current business and communication environment by providing a deep insight into company’s overall strategy.