As an example of international expansion this work will focus on the Beiersdorf AG and its intension to enter into the Russian market for cosmetic products. Although Beiersdorf is a Multi-National-Enterprise (MNE) with a high degree of experiences in foreign markets, they could be confronted with particular conditions as the Russian market is very specific.
The report is fundamentally structured in three main parts: First a short introduction about the Beiersdorf AG and their (cosmetic) products will be given. The second part is a detailed analysis of its environment and starts with assessing the firms strength ands weaknesses. Afterwards possible opportunities and threats for Beiersdorf in Russia will be analysed with regard to the competitive and external environment. The last section will focus on a Foreign Market Servicing Strategy (F.M.S.) for the market entry of Beiersdorf developed on the data of the analysis including the pros and cons of the suggested strategy.
Table of Contents
1. Introduction (Aims and Objectives)
2. Beiersdorf Group (Overview)
3. Analyse of the environment (S.W.O.T.-Analyse)
3.1 The internal environment of the firm
3.2 The external environment
3.2.1 The competitive environment of the industry
3.2.2 The external environment of the country (P.E.S.T-Analyse)
4. Modes of Entry (F.M.S.)
4.1 Exporting
4.2 Joint Ventures
4.3 Foreign Direct Investment (FDI)
4.4 Licensing
4.5 The entry mode for the Russian market
Objectives and Scope
The primary objective of this coursework is to analyze the strategic options for Beiersdorf AG regarding its potential expansion into the Russian cosmetic market. By evaluating the firm's internal strengths and weaknesses alongside the specific political, economic, and competitive conditions in Russia, the study aims to identify the most suitable market entry strategy.
- Analysis of Beiersdorf AG's corporate structure and product lines.
- Assessment of the Russian business environment using SWOT and PEST frameworks.
- Evaluation of different Foreign Market Servicing (FMS) modes, such as exporting, joint ventures, and FDI.
- Recommendation of an optimal market entry strategy based on risk management and competitive advantage.
Excerpt from the Book
4.5 The entry mode for the Russian market
To remind, the aim of the Beiersorf group is to enter the Russian market for beauty and health care products with its production line cosmed and its global brand Nivea. An important point is the philosophy of the Beiersdorf Group which might be also taken into account. As the wishes and demands of the customers are in their focus of interest and they follow an international unique marketing strategy it makes it also important to have enough control about the marketing.
As pointed out before, the main productive advantage in contrast to their Russian competitors is the western technological know-how. The analyse of the technological environment has already shown that the intellectual property rights can not be protected in a required scope. Therefore neither licensing nor a joint venture might be in this case a promising mode of entry. Another fact against a joint venture is that they want to come into the market and not to increase their market shares against their strong competitors. As for the rest the Russian competitors are producing exclusive low quality products for another target group which is not of Beiersdorf`s interest.
Exporting which could be another possibility to bring the products into the market seems to be less advisable either. One point against this strategy are the special export regulations for cosmetic products. There exists the duty for all products to be certificated that they correspond with the Russian norms and standards. (GOST R51121-97; GOSSTANDART of Russia) This confirmation can only be given by certain official institutions. Since January 2003 all imported products must be registered by the Russian Ministry of Health. Furthermore they must certain information on the package or instructions in the national language are necessary. Although the Russian government has made some facilities (a shown before) exporting is still complicated and expensive. Moreover there is a need to have a distributor who knows the process and has good contacts to the officials. Nevertheless this will not guarantee that the products will be market in the companies interest.
Summary of Chapters
1. Introduction (Aims and Objectives): This chapter outlines the scope of the work, focusing on Beiersdorf AG’s expansion into Russia and the three-part structure of the report.
2. Beiersdorf Group (Overview): This section provides background information on the company, including its history, product lines like 'cosmed', and current international market performance.
3. Analyse of the environment (S.W.O.T.-Analyse): This chapter conducts a detailed SWOT analysis, evaluating internal organizational factors and the broader external environment in Russia.
3.1 The internal environment of the firm: This section assesses Beiersdorf’s financial performance, capital investments, and strategic focus on its 'cosmed' division.
3.2 The external environment: This chapter introduces the theoretical framework for analyzing external market forces and industry dynamics.
3.2.1 The competitive environment of the industry: This section uses Porter's Five Forces model to examine the beauty market in Russia and the intensity of local versus foreign competition.
3.2.2 The external environment of the country (P.E.S.T-Analyse): This section analyzes the macro-environmental factors in Russia, including political stability, economic growth, and cultural attitudes.
4. Modes of Entry (F.M.S.): This chapter theoretically defines the various methods a Multi-National-Enterprise can use to enter a foreign market.
4.1 Exporting: Explains the basic strategy of producing at home and shipping goods to the target market.
4.2 Joint ventures: Defines the cooperative investment structure where ownership is shared between firms.
4.3 Foreign Direct Investment (FDI): Explains the strategy of maintaining control through wholly owned subsidiaries or acquisitions.
4.4 Licensing: Discusses granting rights to intangible property to a local entity in exchange for royalties.
4.5 The entry mode for the Russian market: This chapter applies the previously analyzed data to conclude that a green-field FDI strategy is the most viable option for Beiersdorf.
Keywords
Beiersdorf, Russian market, Cosmetic industry, Nivea, Foreign Market Servicing, FDI, Exporting, Joint Venture, Licensing, SWOT analysis, PEST analysis, Competitive advantage, Market entry, Consumer behavior, Intellectual property.
Frequently Asked Questions
What is the core focus of this coursework?
The work examines the strategic considerations for Beiersdorf AG when planning to enter the Russian market for cosmetic products, specifically within their 'cosmed' business line.
What are the central themes of the document?
The report centers on internal corporate analysis, the assessment of the competitive landscape in Russia, and the evaluation of various international market entry modes.
What is the primary objective of the analysis?
The objective is to determine the most effective market entry strategy for Beiersdorf by weighing the benefits of control versus the risks of operational costs and local market barriers.
Which scientific methods are employed?
The report utilizes standard business management frameworks, including SWOT analysis, Porter’s Five Forces model, and PEST analysis to categorize the environmental data.
What does the main body cover?
The main body covers a firm overview, a detailed environmental scan (internal/external), and an evaluation of entry modes like Exporting, Joint Ventures, and FDI.
Which keywords best characterize this work?
Key terms include international business expansion, Foreign Market Servicing (FMS), Beiersdorf AG, Russian market dynamics, and green-field investment.
Why is a green-field strategy recommended over acquisition?
The report notes a lack of suitable Russian firms for acquisition and suggests that a green-field strategy provides better control over technological know-how and long-term quality standards.
How do export regulations impact the decision?
Exporting is deemed less advisable due to stringent certification requirements (GOST R51121-97), mandatory product registration with the Ministry of Health, and high costs associated with local distribution networks.
- Quote paper
- Alexander Dürr (Author), 2004, Foreign Market Servicing Decision - Beiersdorf on the Russian market., Munich, GRIN Verlag, https://www.hausarbeiten.de/document/32968
