Marketing local brand overseas
The objective on this research is for telling the readers about the local brand of Indonesia that will be marketed in either Brazil or Russia. We will also discuss about foreign market entry modes and PEST Analysis. The local brand that I choose is Gudang Garam, which will be marketed in Russia. Gudang Garam is original Indonesian clove cigarette brand that was launched on 1979 in Kediri, East Java. Gait length in the clove industry is characterized by a number of achievements, among others, was ranked 2nd in the category rolled cigarettes “full flavor”.
Made from the leaves of high-quality tobacco and clove, Gudang Garam is dedicated for smokers who appreciate the art of enjoying rolled cigarettes. A blend of high technology and clove mix formula inherited from generation to generation making Gudang Garam is able to provide the irreplaceable experience of smoking cigarettes for the true connoisseur. The reason why I choose gudang garam to be marketed in Russia because, The number of people who are consuming cigarette there have reach the 4th higher number across the world.
It was hard to find clove cigarettes outside Indonesia that’s why I think gudang garam is the most perfect Indonesian local brand that should be imported around the world especially in Russia. Foreign market entry modes differ in degree of risk they present, the control and commitment of resources they require and the return on investment they promise. Types of foreign entry modes: Exporting Licensing Joint venture Foreign Direct Investment (FDI) Internet Each type of market entry have their own advantages and disadvantages: MODE ADVANTAGES DISADVANTAGES
Exporting Minimize risk , speed of entry, minimize scale. Transport cost, Trade barriers & tariff add cost, limit acess to local company. Licensing Minimizes risk of entry, speed of entry, High ROI. Lack of control, knowledge spillover. Joint venture Potential for learning, Viewed as insider, less investment. Difficult to manage, Dilution of control. Foreign direct investment Greater knowledge of local market, can be apply specialized skills. Higher risk than other modes, may be difficult to manage Internet Simpler, easier Easy to get error PEST Analysis
A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors: Political: political factors include government regulations and legal issues and define both formal and informal rules under which the firms must operate. Economic: Economic factors affect the purchasing power of potential customers and the firms cost of capital. Social: Social factor include the demographic and cultural aspects of the external microenvironment. Technological: Technological factors cam lower barriers to entry, reduce minimum efficient production levels and influence outsourcing decisions.
Here in Indonesia we can easily find gudang garam cigarette, since people here are enthusiast with cigarette they sell it everywhere. We can found it in the small minimarket, supermarket, mall ,and etc. There are also some posters across the street in Indonesia about gudang garam. Even though the gudang garam wrote about the disadvantages about smoking but, still the consumer of gudang garam is the most higher compare to another brand of cigarettes. Thesis statement As we know the number of smoking rates in Russia is high, so I believe importing gudang garam cigarette in Russia will be successful because they have much demand there.
This is because they rarely seen clove cigarette and the climate there are cold, so people are likely to smoke to warm their selves. 2. 0 Methods This report is based on the secondary sources. The sources that I found are from the Internet through government website. The materials that I found in the Internet are reliable and current. The data collection methods of the research objectives are containing both qualitative and quantitative. Most of it are qualitative because, it contain of graph, table, and it was colorful. 3. 0 Findings PEST Analysis on Russia:
Political: In 1993, after the crisis in the constitution of Russia and with the support from most part of the population. Russia was officially became the federation of Russia with semi presidential republic. They keep going with the same regime until today. It is very important to have a constant regime and policy to attract more investors. It is also important to have the policies, which provide more benefit and advantages for people who want to contribute or get into the business. Economic: The economics of Russia depends mainly on the natural resources. There are two major resources are oil and gas.
This country has the GDP in the rank of 10th. biggest in the world. Russia is the country with the advantage of natural resources, the big area with the area for agriculture 4th largest in the world and a perfect location between Europe and Asia. Despite all the advantage that the country has, its economic is not comparable to other countries it is because the growth of the economy of Russia is depending the price of the oil in the market. Social: From 1990, with the changes in the regime of politic, the society stepped forward. They convert from a society with autocratic structure to a society with democratic character.
This change enlarges the gap between the poor and the rich people in the society. Even there is no obvious classification structure in society, the stratification is judged by wealth. The most obvious evident of capitalism in the society is that people started to spend in a wasted scale with expensive cars, clothes and outfit that a normal Russian can not afford. Technological: Russia is a country, which is rich in science tradition. The technology sector of Russia started to be recognized from the early of 18th century and continue to develop until today.
There is a political stability in Brazil government the workers party has won the election continuously for 3 times. The focus on the administration policies of the government is steadily towards the growth of the economy. Economic: Foreign firm can own the company 100%, registered capital and earning can be taken back from the country on tax free basis. The country strengthening its economic policy and increasing public private partnership model of doing business that attracts the private people in the world to invest.
Social: since brazil is at the peak of the economic advances which is responsible for a drastic improvement in the social area in brazil. Technological: the Brazilian economy is alive and growing at a rapid pace. That’s why the technological there keep on growing rapidly. Unilever markets its brand in Brazil: A business with real scale, strong brands, people & infrastructure • Underperformance in recent history: Growth below the market (+ 4% p. a. ) Low competitiveness Low profit growth Product quality below standard Customer satisfaction low. Unilever markets its brand in Russia: Unilever strategic priorities include:
Personal care D&E Vitality The changing of the Unilever in D&E is clearly seen in the graph it keep on increasing especially in the D&E. 4. 0 Discussion There will be the disadvantages and advantages by importing gudang garam to Russia and Brazil, because every country have a different pest analysis and provision. Here are some advantages and disadvantages: Russia ADVANTAGES DISADVANTAGES A lot of smokers The climate is cold Russia is the nearer compare with Brazil Hard to ask for the permission Different Languages Brazil ADVANTAGES DISADVANTAGES It might be easier to communicate Government grants are easier
Brazil is kinda far from Indonesia The number of smoker are not too many compare with Russia There will be also some factors that might be influence on my finding, the website might be too old or not really sufficient because every website say a different thing. 5. 0 Conclusion I have decided Gudang Garam, which will be marketed in Russia. Because, I have done it on the research from the secondary resources from any different website. The reason why I choose gudang garam to be marketed in Russia because, The number of people who are consuming cigarette there have reach the 4th higher number across the world.
It was hard to find clove cigarettes outside Indonesia that’s why I think gudang garam is the most perfect Indonesian local brand that should be imported around the world especially in Russia. The action that should be taken for my marketed are to take approval from both government in Indonesia and also Russia, which is really hard because of the different language. We need a big budget to start importing gudang garam cigarette to Russia because the location is kinda far.