Research Report on Tsingtsao Beer (Research Paper Sample)

[Company: Tsingtao]
[Product: Beer]
[Parent Country: handing, China]
[Host Country: Israel]
International Marketing Plan
[student number]
[date]
Module: Global Marketing Management 955N1
Contents TOC \o "1-3" \h \z \u 1.SWOT PAGEREF _Toc55915383 \h 32.SMART Objectives PAGEREF _Toc55915384 \h 33.Entry mode strategy PAGEREF _Toc55915385 \h 34.The international marketing mix PAGEREF _Toc55915386 \h 55.Implementation and coordination PAGEREF _Toc55915387 \h 76.References PAGEREF _Toc55915388 \h 10
1 SWOT
Strengths

Weakness

* Product differentiation- a distinguished and unique taste from standards industrial beers
* Wide and diverse product portfolio to target various market segments
* Strong brand reputation due to global presence in China, Central and South America, Australia, North America, Japan, and Korea, among others.

* New entrant
* Shifting consumer taste and preference

Opportunities

Threats

* Consumer demand for crafted beer
* Market expansion-Growing market due to increase in the millennial generation and evolving consumer preferences
* E-commerce logistics
* Venturing in strategic partnership

* Availability of substitutes related to established mass-production companies 
* Changing governmental regulations related to the environment, health, and tax

2 SMART Objectives
1 Enhancing brand reputation in Israel to 5% by the end of 2024 financial year.
2 Generate revenue of approximately 6% by the end of 2024 financial year.
3 Entry Mode Strategy
Selecting a mode of expanding business or entering a foreign market is a critical strategic decision for international companies. Managing risk, cost of investment, and control are the common influencing factors that impact international mode of entry decisions. Developing a market entry strategy that balances the risk and control is fundamental for the success of Tsingtao beer in the Israeli market. Root (1987, p. 5) describes a market entry mode as an institutional arrangement that enables a firm’s product, human skills, technology, and other resources to enter a foreign country. There is a wide range of market entry modes that firms select from based on evaluating benefits and challenges that influence selection (Horská, 2014). The intermediate market entry mode is the preferred strategy because Israel is an emerging market for Tsingtao beer.
The intermediate mode of market entry provides a shared control and minimises risks associated with business expansion (Horská, 2014). In the case of Tsingtao beer, intermediate mode through contract manufacturing enhances local production, which provides better interaction with local customer demands to increase brand loyalty and trust towards the Tsingtao beer. Contract manufacturing also renders production costs low due to the availability of raw materials for beer production. Although contract manufacturing provides numerous advantages as an entry mode for Tsingtao beer, shared control presents disadvantages in terms of losing direct control over manufacturing functions. Care needs to be exemplified during the contract negotiation to ensure that the contract manufacturer meets the quality and distribution standards of Tsingtao beer. 
Alternative Market Entry Modes
Indirect exportation is an alternative mode of entry that Tsingtao can employ. Indirect exportation is a traditional and well-developed market entry strategy that involves the sale of goods via a domestic intermediary. Indirect exportation differs from other market entry modes because the intermediate product is produced outside the target host country (Horská, 2014). Exportation is a suitable alternative for the company due to its low risk and high flexibility. However, the export mode is associated with low control to demonstrate its shortcomings. High dependency on agents renders indirect exportation with limited control (Holtgrave & Onay, 2017). Another major limitation of indirect exportation is the low profitability of the transaction and the inability to gain substantial international experience. Tsingtao beer is established as a reputable exporting brand with a share of approximately 50% in a total volume of foreign deliveries. Tsingtao beer is exported to about ninety countries and locations across the world. Exportation of beer contributes to approximately 2% of Tsingtao revenue (Beer Business, 2016). In this context, an alternative approach to intermediate entry mode is exportation, which has proved to be fundamental to the Tsingtao beer company. However, low control renders limit the adoption of exportation. 
The investment market entry is an equity-based mode where companies set up wholly-owned subsidiaries in a host country. Investment entry mode is an alternative market entry strategy that allows foreign firms to purchase a local market player (Greer, 2018, p. 16). Purchasing local market firms is an investment entry mode enabling parent companies to own subsidiaries fully. Investment market entry mode is associated with high control, high risk, and low flexibility. Setting up wholly-owned subsidiaries provide instant access to the targeted local consumer network to facilitate rapid expansion and market acquisition. Investment mode through purchasing local firms provides absolute control and access to local assets (Horská, 2014). Purchasing local firms will allow Tsingtao to take advantage of the local market partner’s local knowledge, infrastructure, and reputation. Setting up wholly-owned local subsidiaries will provide Tsingtao (parent company) with total control over sales and revenue to facilitate rapid expansion. The disadvantage of setting up wholly-owned subsidiaries is meeting governmental regulatory requirements (Greer, 2018, p. 16). The potential challenges that Tsingtao will face as a parent company include meeting regulation requirements and gaining local knowledge. For instance, the Organization for Economic Co-operation and Development (OECD) Codes of Liberation notes Israel’s governmental regulation on inward direct investment is below the set target. The Israel authority has maintained restrictions on capital movement. Portfolio investments are affected in industries where inwards direct investment restrictions apply to aggregated foreign ownership.  
In summary, control, risk, and flexibility are essential factors that influence the selection of entry mode adopted by firms when entering new markets. Investment mode of entry through the purchase of local firms and strategic partnerships has demonstrated strength in providing new entrants with direct control due to their presence in the host country. Setting up wholly-owned local subsidiaries or engaging in strategic partnerships with local firms will give Tsingtao flexible control and access to local assets, including local knowledge and infrastructure. However, the investment mode of entry is not preferable for Tsingtao because of high risk and low flexibility. Another alternative market entry mode, exportation, demonstrates strength in terms of low risk and high flexibility. A low cost of investment due to reliance on intermediaries illustrates the flexibility of the entry mode. Although Tsingtao has established its brand image as an exporting company, low control is a major issue that hampers Tsingtao from adopting an indirect importation market entry mode. The intermediate market entry mode through contract manufacturing is the preferred strategy that provides shared control and minimises risks. Contract manufacturing is characterised by numerous advantages, including supporting local production, promoting flexibility, and lowering the cost of production. Although the control is an underlying issue, ensuring the contract manufacturer meets the quality and distribution standards is of great significance to minimise the risk related to control.
4 The International Marketing Mix
The marketing mix framework outlines the strategies and approaches that firms integrate to promote products and services to a target market. The marketing mix model constitutes 4Ps that stand for product, promotion, place, and price (Kotler & Keller, 2016). The four elements are interrelated and influence each other to facilitate exchange between consumers and marketers. The framework is incorporated to provide an international market mix for Qingdao based on the selected entry model and marketing objectives. 
Product
Product describes goods offered or produced by a firm. In the international market mix, the product is a component of marketing designed to ensure they meet consumer needs and tastes (Kotler & Keller, 2016). Products are characterised by unique characteristics, features, and attributes, which reflect the diverse needs of consumers and attract a variety of customer segments based on factors such as gender, socioeconomic status, race, or age (Eavani &Nazari, 2012, p. 9916). Product differentiation is a critical aspect of the international market mix that provides firms with a distinct advantage over competitors. Tsingtao beer aims to provide a broad product portfolio characterised by different tastes to meet consumers' diverse needs and preferences. In 2015, Tsingtao Brewery adopted a strategy referred to as “Principal brand Tsingtao Beer + Secondary brand Laoshan Beer” to optimise its product mix and brand mix (Beer Business, 2016). The brand and...