International Marketing Case Study (Case Study Sample)

Assessment 2-Case Study 2 Name: Institution: Course: Professor: Date: Table of Contents TOC \o "1-3" \h \z \u Assessment 2-Case Study Report PAGEREF _Toc100441778 \h 31.0 Background information about the company, its history and product portfolio PAGEREF _Toc100441779 \h 32.0 International Market Situation Analysis PAGEREF _Toc100441780 \h 32.1 Economic and Financial Environments PAGEREF _Toc100441781 \h 32.2 Political & Legal Environment PAGEREF _Toc100441782 \h 52.3 Cultural Environment PAGEREF _Toc100441783 \h 63.0 Analysis and strategic recommendations regarding Europe and China PAGEREF _Toc100441784 \h 74.0 References PAGEREF _Toc100441785 \h 9 Assessment 2-Case Study Report 1.0 Background information about the company, its history and product portfolio R.M Williams is an Australian footwear and clothing company. It is one of the best-known footwear brands globally, and its leather boots have been featured by the most famous people worldwide. The company’s product portfolio comprises luxury footwear and clothing for men and women ("The history of R.M.Williams", n.d.). The company has built a reputation over the past nine decades for the superior craftsmanship, durability, and style of its boots, allowing it to become a classic fashion brand in Australia. R.M Willams was founded in 1932, and the founder’s craftmanship distinguished him from the competitors. He constructed the boot using a single piece of leather, a technique that has been passed down the company to create a clean, timeless Australian look ("The history of R.M.Williams", n.d.). Over the following decades, the company expanded by opening new production workshops and retail stores in more Australian states. Due to its superior craftsmanship and style, the brand gained global popularity, and it attracted the attention of U.S presidents, such as Bill Clinton. In the last decade, the company has undergone numerous ownership changes, for instance, the acquisition by Capital Asia and the subsequent acquisition by Australian private investment company, Tattarang ("The history of R.M.Williams", n.d.) Over the past nine decades, the R.M Williams brand has attained iconic status domestically and internationally. The brand’s commitment to superior handcrafted craftsmanship, evidenced by using a single piece of leather, has allowed it to build a reputation for quality, style, versatility, ruggedness, and durability (Smith, 2021). The brand has rebranded itself into a luxury footwear and clothing brand, signified by its style and the attention to detail in every product. The handcrafted leather boots and belts are rooted in the Australian bush culture, and the brand has been true to its Australian heritage as it has expanded to over fifteen countries. 2.0 International Market Situation Analysis 2.1 Economic and Financial Environments The Chinese and European markets are similar in terms of consumers' financial purchasing power. Kharas & Dooley (2020) identify that the middle class in China has been rising, contributing to the largest consumption globally at $7.3 billion annually, ahead of the USA and Europe. Bain & Company (2020) explain that the rise in the Chinese middle-class is behind the rapid growth in the luxury goods market, especially among the millennial and generation Z demographic. Bain & Company (2021) identified leather goods as the fastest growing luxury category, followed by fashion and lifestyle in China. The World Bank further estimates that the Chinese economy will grow by 8.5% as it recovers from the devastating effects of the COVID 19 crisis (The World Bank in China, 2021). This will contribute to a growth in the Chinese middle class from 400 million to 550 million by 2025 (Cyrill, 2019). In contrast, Europe has enjoyed relatively high living standards and a stable middle class. However, since the 2009 global financial crisis, the European middle class has become more fragile and has declined in some countries (Bussolo et al., 2018; Derndorfer & Kranzinger, 2021). The report by Bain & Company (2021) identifies that the European share of the personality luxury market has been declining since 2019, and China will surpass it by the year 2025. Europe and China employ radically different economic systems. The Chinese adopt a mixed economic system of neoliberalism ideals with socialist characteristics. Lim (2014) describes it as “socialism with Chinese characteristics.” Lim (2014) argues that the Communist Party of China (CPC) is the primary driver of “Socialism with Chinese Characteristics”, which demands: (1) committing to the truths of Marxism, (2) commitment to socio-spatial egalitarianism, and the pursuit of common prosperity or affluence. At the same time, Lim (2014) conceptualises that it espouses neoliberal ideas such as belief in the virtue of privatisation of enterprises, reducing tariffs and opening of markets to multinationals, and adopting the Washington consensus ideals such as free markets. Therefore, the Chinese economy is privatised and free market based, but the CPC exerts influence and power over the affairs of private enterprises, for instance, demanding representation of the party in the corporate governance structure (Livingston, 2020). In contrast, Europe adopts the free-market economy with the free movement of capital among the members of the European single market. The launch of the European single market in 1992 sought to promote the “freedom of goods, services, capital, and people to cross-borders” (Erixon & Georgieva, 2016). Mijs et al. (2016) argue that the adoption of neoliberalism by Eastern Europe countries indicates the support of the free-market economy by most European countries. Therefore, the Chinese market is attractive due to the growing middle class and purchasing power. However, a new business must understand that the CPC plays a critical role in influencing business decisions. The European market offers a developed middle class but with slower growth than China. 2.2 Political & Legal Environment As emphasised earlier, the Chinese political-social economy is characterised by “Socialism with Chinese Characteristics.” Albert, Maizland, & Xu (2021) identify that the CPC is the ruling political party in China, and President Xi Jinping has solidified its influence. Livingstone (2020) argued that the CPC has sought to grow its influence in private enterprises, and this has contributed to tension between China, Australia, and the U.S. The party has taken an assertive stance in international relations, which has attracted criticism, especially from the United States and its allies. Buckley & Cave (2021) explains this provides the background for the rising tensions between Australia and China (which have been strong trade partners), with the former Australian prime minister seeking to stand up against the perceived Chinese meddling. The U.S accused Huawei of stealing trade secrets and claimed the company was a spy agent for the CPC. Australia subsequently banned Huawei from building its 5G network due to directives from the U.S government. China responded by opening an anti-dumping investigation against Australian barley. The trade dispute between these two countries has escalated with China imposing high anti-dumping tariffs and custom bans on Australian products such as barley, wine, beef, wool, and copper. Wilson (2021) argues that this was China attempting to force Australia to “toe its line”, but Australia has been active in diverting its exports to other countries (but it lost almost $1 billion from failed exports to China). This suggests factitious political relations between the two countries. The Chinese legal environment is challenging for a new business to navigate (Froese et al., 2019). Froese et al. (2019) argue that the local laws promote domestic businesses over foreign enterprises. For instance, the local laws might require a foreign company to form a joint venture with a local Chinese firm, which is common in the automotive industry. As a result, Orr (2014) explains that a business must establish the right strategic positioning by aligning the company’s intents and policies with the Chinese government's statements (show a commitment to China). In contrast, the political relations between Europe and Australia are stable, and the framework agreement between the E.U. and Australia solidified the relations. Since the formation of the E.U., European countries have enjoyed relative political stability conducive to business. However, Arens & de Aldecoa Fuster (2019) identifies that political instability in Europe has been rising, indicated by events such as Brexit, the yellow vest protests in France, and most recently, the conflict between Russia and Ukraine. Nonetheless, the European market offers a relatively stable and understandable legal and political environment. Furthermore, Australia enjoys attractive trading agreements with most E.U. states, attracting foreign companies. 2.3 Cultural Environment An analysis of Hofstede’s cultural dimensions and the cultural context reveals significant differences in the Chinese and European cultures. Moser et al. (2014) differentiate between low and high context cultures; high context cultures seek to interpret and convert clues and gestures in communication. China is an example of a high-context culture, and communication in this context comprises non-verbal signs. Moser et al. (2014) identified several Chinese cultural standards such as (1) seeking harmony in social politeness, (2) developing social relationships, (3) seniority, etiquette and bureaucracy, (4) patience and long-term nature of targets, and (5) the exchange of obedience for care. Hooker (2008) emphasises the pervasiveness of non-verbal cues and relationship building in high-context cultures such as China. In contrast, most Europeans adopt a low-context culture similar to Australian cultu...