Bank of China is one of the firms that have been keen on venturing into new markets around the world. This firm has developed various strategies to help it cope with the new markets in the host countries. The firm has created awareness for its products in this market and therefore, has managed to increase its market share locally. The growth of the firm has made it necessary to look for markets globally. Internalization is a complex that should be done with smart strategies. It is very important for a firm to look for strategic innovative sweet sports in the market. Other market factors may remain similar to all other firms. However, the strategic sweet sports should be well sort for, and maximally utilized by this firm in order to realize success. It is through these strategies that this firm can manage market forces in these new markets.We will write a custom Bank of China: Internationalization Strategy specifically for you
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The global market is increasingly getting very competitive, and firms are forced to come up with strategies that would make them have competitive advantage over other firms. Internalization is one of the key pillars that firms are currently keen to establish in an increasingly competitive market. This is what Bank of China has been keen on in the last few years. This firm has managed to dominate the Chinese market in its financial products. The management has realized that the market is getting very competitive and relying on single products may prove futile if that line of products is attacked. The world market has become very competitive. Different firms are coming into the market with products that are already existing, causing saturation of products in the market (Johnson, Scholes & Whittington 2011, p. 48). The Chinese market is a free market where foreign firms have the liberty to enter the market and leave at will. This means that Bank of China is open to international competitors in this market.
Going global is one of the strategies that the management Bank of China has been keen especially in the European, American, and Asian markets. In the global market, there are a number of challenges that this firm faces, some of which it did not face in the local market. Coming up with a proper strategy in the global market is the best way through which this firm can maintain its market share and profitability in the market (Kratschmer 2011, p. 3). This research focuses on evaluating the internationalization strategy of Bank of China with the aim of coming up with recommendations to the board of directors of this firm.
Purpose and scope
The world market in the finance industry has become very competitive. Various firms have come to the realization that internationalization is the best way through which they can succeed in the market. For this to be possible, it is important that the management develops strategies that would help it in the international market. In this research, the purpose is to determine the international marketing strategies used by Bank of China to penetrate markets successfully. The scope of the research will be limited to the finance industry and to this firm specifically.
Environmental Audit: Current Markets
The business environment is increasingly getting competitive. The market in which Bank of China is operating faces stiff competition from other established firms such as Barclays Bank. The management of Bank of China has come to realize that in this market, the best way to stay above this competitive market is to go for the international market. This not only expands the market for this firm, but also helps the firm spread its risks in the market. As David (2008, p. 47) says, the internationalization is the only way that firms in the contemporary world can fight the threat of new entrant into their markets. The US and British markets make the most attractive international markets for this firm. In order to understand the capacity of this firm, a SWOT analysis given below would be appropriate.
SWOT analysis is one of the important tools that are very popular in analyzing a company. Strength of this firm that would translate to increased profitability is a positive image in the market due to its environmental friendly projects. The main strength of this firm is laid on four pillars (DeAnne, Gary, Hyde & Tipping 2004, p. 67). The first pillar is product design. This firm has design its products to meet various needs in the market. This has enabled it maintain customer satisfaction in the market. Bank of China has been keen on formation of alliances will various firms and professionals with the aim of providing value to its customers in various regions where it operates (Spulber 2007, p. 28). Another pillar for this firm is diversification of the products. This firm does not rely on just one product.
Despite the above strengths, this firm has some weakness. The first weakness that this firm has is the discontent employees in some region such as the United States. The fact that some of the employees are not satisfied with the way they are managed makes it very difficult for this firm to increase its profitability in these markets. The initiative of managing the environment is very challenging financially. It would cost this firm, large sum of money if it would sustain such projects over the years it expects to operate in this market (Evans 2012, p. 21). The firm may not have the capacity to rid the environment of all the plastic wastes, unless it is supported by other agencies within the local society (Hill & Jones 2010, p. 83). Success would be pegged on how determined the other partners are in fulfilling their duties.Get your
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The firm has a number of opportunities in the external environment. In the local market in China and other European countries, this firm has managed to build a large base of loyal customers. The governments of China and other European countries have strongly appreciated the move of this firm to help improve the environment of these countries, a fact that has earned it a large base of customers (Fayol 1949, p. 52). The Chinese government, and other governments where this firm operates, has maintained a very stable political environment. The firm has adopted the emerging technologies in its operations, a fact that has helped it increase its efficiency (Ferrell 2011, p. 101).
This firm faces a number of threats in its operations. Threats may not be predictable in this industry, though the firm may try to reduce the possibility of occurrence. The first threat that this firm faces is price wars in the market. There is a possibility that the competitors may consider this move as a strategy that this firm uses to charge cheap prices for their products. Such price wars are always dangerous to the prosperity of a business. The initiative may fail to make any serious sense (Amrosini, Johnson & Scholes 1998, p. 118).
Bank of China has embraced innovation as one of its key pillars. This is to ensure that they maintain their market share by constantly introducing new value to its customers through new products. For this reason, they regularly introduce products to the market. These products have a lifecycle that takes the following path.
The first stage is introduction. At this stage, a new product is taken to the market through commercialization process. The second stage is the growth. In this stage, the product will experience growth in the market share as it experiences continued acceptance in the market (Anderson 2011, p. 57). The third stage in the maturity stage. At this stage, the firm experiences no more growth because the growth shall have reached the highest level. The last stage, which some products may not reach easily, is the decline stage. The products begin to lose its market share to new and better products.
One of the main pillars of Bank of China is internalization. This firm has come to realize the importance of going global. Although it has managed to acquire large markets in the Far East and Middle East markets, this firm is yet to capture the South American and African markets (Frynas & Mellahi 2011, p. 96). It is important for this firm to come up with proper approaches that it plans to use in the South American and African markets and other markets globally. In these new host countries, it is important that the firm devises a competitive advantage which would make it strong enough to compete against other competitors in this market. According to David (2008, p. 47), this firm will be faced with new challenges both in its micro and macro environment. Operating in a new environment comes with a number of challenges. The first approach that this firm should use in this market is awareness campaign in this new region. The products should be known in this new market.
Decision and Motive Framework
External Analysis of the New Host Countries (South Africa and Albania)
Analyzing the new markets is very important in helping to understand the ability of the firm to succeed in them. The Albania has experienced a long period of political stability that has made it conducive for business. South Africa has also had a long period of political stability, making a good environment for this firm to prosper. Lack of political stability would mean that various businesses are not in a position to conduct business normally. Economically, this firm has some difficulties both in South Africa and in the Albania.We will write a custom
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The firm has been faced with economic recession that hit the Albania and South Africa. Albania was heavily affected by the recession that hit the world in 2009. The country however, was able to recover quickly from this (Coulter 2009, p. 22). South Africa was not spared either by this recession. The economy of South Africa faced a serious challenge due to this recession, and many business units suffered. This had serious negative effects on the firms’ revenues as many of the customers considered the products as non-basic.
The socio-cultural environment of the Albania and South Africa is diversified. This is because this country has people from all over the world. These two countries cherish equality, and women have equal economic strength just as men. In these countries, the firm does not segment the market based on sex, but age (Coveney & Highfield 1995, p. 29). The technological environment that firms in the Albania have to operate in is very dynamic. Technology inventions and innovations, especially in the field of communication have been the main challenge and strength of this firm at the same time (Daft 2009, p. 72). Legally, this firm has not faced major challenges. The laws that govern trade in South Africa and the Albania where this firm operates have been very favorable to this firm (Norton, Mochon & Ariely 2011, p. 27). Failure to follow the industry and national laws and regulation may not only lead to serious fines imposed by the government on the firm, but even a total closure of the firm.
The firm should also be ready to both the mass media and the social media for marketing its products. This firm should ensure that it creates a strategy that will make its products be considered as substitutes to other existing products other than direct competitors (Gerber 2008, p. 73). This will reduce the level of competition that may come against its products in this market.
In the new Host countries, the management should appreciate the fact that there is a massive difference between the local market and the new markets. For instance, the market in Africa is very different from the markets where this firm currently operates. These are factors that will affect this firm directly (Gerry & Scholes 2008, p. 37). The national competitive advantage that this firm enjoys in the local market in China by virtue of being a Chinese firm may not be applicable in the new international markets.
Market Entry Strategy
The Bank of China has increased its coverage to include several Asia nations, besides the European and American markets. According to Hooley (2008, p. 18), getting into a new market is always a very delicate process. To get into a new market requires a smart strategy that will be able to attract the attention of the consumers without alarming the competitors. There are a number of entry strategies that this firm can use in order to avoid this commotion and ensure that it enters the market peacefully.
One of the most common market entry strategies in the current world is joint ventures or what others call partnerships (Cavusgil, Knight & Riesenberger 2012, p. 40). In this strategy, this firm would need to find firms in the new markets which it wishes to enter. This partner should be an established firm with a strong brand in the market. This firm would then enter into an agreement where the two firms will view the other as a partner. They will work as a unit joining their investments in order to be able to face all the possible challenges as a solid team. Another strategy that this firm can consider is a direct market entry. In this strategy, this firm would establish its subsidiary branch in the new market, and start operating as a semi-autonomous unit to the parent firm. This is always a very expensive strategy because the management would be forced to rent or buy new premises where the firm will be operating, and purchase all other equipments that might be needed in the new branch for its normal operations. However, it is beneficial in that the firm will have full control of the branch.
The third strategy can be through franchising. This is an easy and quite way through which this firm can enter new markets. In this strategy, these firms will alliance with other firms in the new regions that would use its name in that new market. The arrangement can be made in a way that after a specific period of time, say one year, the franchised firm would become a subsidiary to this firm.Not sure if you can write
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Justification and Success Criteria for the Above Strategies
Each of the above mentioned strategies would be appropriate in different situations and in different markets. Joint venture is appropriate when there is an established firm in the new host country that can easily partner with this firm. In this strategy, success criteria will be measured by the ability of the firm to blend with the new partner to generate desired results in the market. Direct market entry can be appropriate when the market lacks serious competitors or when there is no serious firm that can partner with this firm. Franchising is appropriate when the firm is trying to penetrate markets considered remote. In this case, success will be determined by how well this firm’s brand will be known in that market.
The Implications of the Financial Services Marketing Mix Strategy
Marketing mix strategy has been very popular in explaining how a firm can use various approaches in enhancing its competitiveness in the firm. The Bank of China must understand its marketing mix in this industry. In this industry, the firm deals in financial services. The products in this case are the loans it extends to its customers, various types of accounts among other financial products. The place in this mix includes various locations where this firm has branches both in the local and international markets. The firm should be very careful when determining prices for its products. It should set competitive prices that while ensuring that it gains profits makes it to be seen as a firm with attractive prices. The withdrawal fee, the interests on loans, interest on fixed deposit accounts should all be set based on the prevailing market conditions.
Customer Economics and Segmentation Considerations
This firm should segment the local and international markets based on the social class. This segmentation should be done in a way that will ensure that those in higher and lower social classes are included as customers of this bank, but in different segments. This will help modify the products to suite different sets of products.
Product provision, Pricing and distribution strategy
Norton, Mochon and Ariely (2011, p.67) observes that it is important for the management to ensure that products reaches the market in time when the customers are still attracted to it. The firm should try to incorporate three strategies to ensure that this is a success. The three strategies include personal selling, direct marketing and public relations.
Personal selling is important when the product is first introduced into the market. Hooley (2008, p. 57) defines personal selling as a strategy where a firm engages sales agents to sell its products to the consumers. Personal selling is very reliable when selling goods that are highly involving. Some products may require the seller to explain to the buyer how the product is used. Sales agents are therefore, required for this task. Although it may be considered expensive, personal selling is very important because it allows for a personal relationship with the customer. A customer can easily be convinced to buy this product because of this personal relationship. Financial firms such as Bank of China have not considered using personal selling as the best strategy of reaching out for the customers, especially due to the size of the market. This strategy is very efficient when the size of the market is relatively small.
According to Hooley (2008, p. 117), it is always important to maintain a positive relationship with the public. Public relations help a firm in maintaining a positive image in the market. This scholar says that firms (irrespective of their size), needs to maintain a positive relationship with the public in order to operate in the market successfully. One of the factors that make public relation very important is the need to manage negative propaganda that may be leveled against the firm. The market has gotten so competitive that firms are using every available strategy to win the competition. This involves spreading wrong message to the public about the firm.
Hooley (2008, p. 29) recalls the incident Barclays Bank was accused of engaging in deals that allowed fraudsters and other drug dealers to use the bank to enhance their activities around the world. This resulted in a negative public image of the firm. This message was highly distorted in the face of the public. This firm was considered as a corrupt firm by the local and international market. Public relation department also had to convince the public that this firm had implemented policies that are meant to avoid enhancing criminal activities.
Bank of China may need to employ direct marketing in some selected markets in Europe and United States. Direct marketing is important in the current competitive market. However, this strategy is not very easy when a firm produces in mass. Direct marketing, just like personal selling, involves sending specific individuals to the market to engage consumers directly. In this case however, the individual sent to the market must be an employee of the firm. As Ferrell (2011, p. 82) puts it, it is a situation where a firm bypasses all the intermediaries to sell its products directly to the customers. A firm reach out directly to its customers. Hooley (2008, p. 58) says financial firms are in this best position to use this strategy.
Conclusions and Recommendations
Bank of China has been successful in the current markets where it operates. Although it had some challenges in the American markets, the management has been able to mitigate the challenges, and the benefits of this have been obviously seen. The trends shown above are clear indications that Bank of China should consider adjusting its strategy in the market in order to be able to survive the new market competition (Gountas & Mavudo 2008, p. 37). If the current trend continues, chances are high that it may be forced out of the market. The management should consider implementing the following recommendations.
- The management should consider moving most of its operational activities online. It should consider making the process of booking the products, and payments of the services online. This will reduce operational activities within the firm.
- The management should consider improving the value they offer customers. This may include offering additional benefits to the customers such as free account opening. This will increase levels of satisfaction of customers.
- The management should embrace the emerging trends in the market. It should use the emerging technologies such as social media marketing to reach out for the customers.
- The management should increase the number of young innovative employees who can help the firm manage the emerging technologies.
- The management should increase its corporate social responsibility, especially on environment, to improve its public image.
- The firm should consider increasing its partnership with suppliers to ensure that there is constant customer satisfaction.
- The management should ensure that employees are constantly motivated in their various duties in the firm.
- The management should address all the needs of the employees to the best of its capacity. It should address all the complaints that are put forth by the employees of this firm.
Implementing the above recommendations will have a number of advantages to the firm. However, it also comes with a number of challenges that this firm must be ready to face. The firm must be ready to face these challenges, especially the cost of implementing the strategies, when it decides to implement these strategies.
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