INTERNATIONAL MARKETING STRATEGIES OF FOREIGN

COMPANIES IN:

UNITED STATES OF AMERICA

ANKUR PANDEY (IM-2K8-007)

ABHIRAJ PATEL (IM-2K8-001)

ECONOMY

Rank: 1st (nominal) / 1st (PPP) Currency: US$ (USD) Fiscal year: October 1 – September 30 GDP: $15.776 trillion (September 2012) GDP growth: 2.3% (September 2011–September 2012)  GDP per Capita: $48,450 (2011; 14th, nominal; 6th,

PPP) GDP by Sector: Agriculture- 1.2%;

Industry- 19.2%, Services- 79.6% (2011 est.)

Nature of Economy: Mixed

Credit rating

Standard & Poor's:AA+ (Domestic)AA+ (Foreign)AAA (T&C Assessment)Outlook: Negative

Moody's:AAAOutlook: Negative

Fitch:AAAOutlook: Negative

Economic History

The economic history of the United States has its roots in European settlements in the 16th, 17th, and 18th centuries.

The American colonies went from marginally successful colonial economies to a small, independent farming economy, which in 1776 became the United States of America.

In 180 years the United States grew to a huge, integrated, industrialized economy that still makes up over a quarter of the world economy.

The United States has been the world's largest national economy since at least the 1920s

BUSINESS ENVIORNMENT

10th in ‘FORBES- Top 10 Countries For Business-2012’

10th in ‘2012 index of Economic Freedom’ 23rd in ‘The Enabling Trade Index-2012’ 18th in ‘Economic freedom of the world

2012’ 4th in ‘Ease of doing Business’ and 13th in

‘Starting a Business’ according to World Bank Reports-2012.

Trade Facts

Venture capital, as an industry, originated in the United States and it is still dominated by the U.S

Out of World's 500 largest companies, 133 are Of the headquartered in the United States !

There are more than 250 general and special purpose zones in the United States, including The North American Free Trade Agreement, or NAFTA.

HARVARD BUSINESS REVIEW

According to a report of the Harvard Business Review in March 2012, by Michael E. Porter and Jan W. Rivkin 

This research finds two sets of avoidable causes that can improve the business environment in the US.

The First Cause

First are poor policies. The U.S. government is failing to tackle

weaknesses in the business environment that are making the country a less attractive place to invest and are nullifying some of America’s most important competitive strengths.

The government has also failed to eliminate distortions in the international trading and investment system that disadvantage the United States.

The Second Cause

Second, in the rush to globalize, companies have overlooked current and latent advantages of a U.S. location.

Many factors affect the profitability of operating in a certain locale: wage levels, skills availability, utility rates, taxes, subsidies, shipping costs and reliability, local productivity, supervision costs, and many more.

These factors are complex, interrelated, and dynamic.

Locating an activity in one country often has ripple effects on activities elsewhere.

The Second Cause

Because many companies are still learning how to weigh these factors—indeed, processes for making location decisions have lagged behind those for virtually all other major investment decisions—companies can fall prey to biases that work against the U.S.

Suggestions…

According to the Report, If the U.S. can tackle some of its weaknesses as a

business location, there are grounds for optimism. Important trends are beginning to favor a U.S.

location, such as rapidly rising wages in emerging economies, increasing transportation and logistical costs, and shortening product life cycles, which makes “near-shoring” attractive.

Companies are also starting to understand the hidden costs of off-shoring and to see and act on their ability to improve business environments in their U.S. communities.

Japanese

South Korean

Indian

(Covered in this Presentation)

Foreign Companies in US

Japan

Challenges for Japanese Companies

Americans have been quite Conservative and repulsive for Japanese competitors. It can be explained in the following Cases.

Two highly publicized rulings in particular by U.S. juries awarding very substantial damages for patent infringement against Japanese companies confirmed fears in Japan that the American jury system is often biased against large Japanese companies.

Minolta-Honeywell

Minolta had infringed Honeywell patents covering autofocus camera lens technology and had been ordered to pay $96 million in damages by the Jury.

Later, Minolta ultimately settled the case for $127.5 million.

Nintendo

Likewise, Jury ordered Nintendo to pay $208 million to a bankrupt U.S. company for infringement of its patent covering video games.

Another Japanese video game manufacturer had previously settled with the U.S. patent owner prior to the ruling.

Smith-Corona vs. Brother: from defense to offense The most well known affirmative use of

the U.S. antidumping laws by a Japanese company arose out of the filing of an antidumping petition in 1979 by Smith Corona Corporation against imports of portable electric typewriters ("PETs") from Japan.

A number of Japanese producers of PETs, including Brother Industries, were named as respondents in the antidumping investigation initiated as a result of Smith Corona's petition.

How did they Respond ?

When confronted with unreasonable demands from their competitors, Japanese companies no longer did capitulate, but readily challenged these demands by going to court.

They might not have always been successful in these endeavors, but their perseverance has earned them the grudging respect of their American and foreign competition.

Their strategy has even begun to be emulated by some of their foreign competitors.

Japanese businessmen have, indeed, enacted this aspect of their strategy for doing business in the United States "broadly, correctly and openly"

TOYOTA

Toyota

Ranked 1st among top vehicle manufacturing groups (Volume), end of year production-2010 by the International Organization of Motor Vehicle Manufacturers (OICA).

Toyota's (TM) share of the U.S. light vehicle market is 18% and Honda's (HMC) is 10%. GM's (GM) share of its home market is about 22%.

Fifty-five years ago, the No.1 U.S. car company had 54% of the U.S. market. By this time next year, GM's piece of the American car pie could drop another 50%, bringing it closer to Honda's.

There is vast opportunity as it is said that GM and Chrysler, after years of poor management or bad luck will lose a tremendous amount of business if they continue operating in bankruptcy.

Toyota

Toyota has played well in a long waiting game in and made better cars than U.S. companies.

It Kept labor costs low and built a reputation for durable and dependable products.

being hurt by the global car sales downturn, it never had the labor cost or corporate debt problems that plagued GM.

It has the balance sheet to make it through the crisis.

‘Maybe Toyota has been lucky for decades or maybe Toyota was just smart’

Toyota Vs. General Motors

Toyota Vs. GM, according to Peter Morici, professor at the Smith School of Business,University of  Maryland School, and former Chief Economist at the U.S. International Trade Commission.

Toyota Vs. GM

Toyota enjoys much lower labor costs in the United States. Benefits from an undervalued yen for cars made in Japan.

In the United States, this comes to about $2500 per vehicle.

The entry level and middle level market segments are very sensitive to price and vehicle durability.

Toyota has been able to translate its cost advantage into vehicles with higher, more attractive content and longer life than General Motors.

It's Camry and Corolla, and derivatives of those cars, have been able to dominate their market spaces and have even set the standard others must follow and they establish the price thresholds.

Strategies

Toyota is constantly looking for ways to lower costs and improve products.

It translates most of the additional profits it earns, over GM, into better product design and additional capacity.

At GM, the Executives vote themselves bonuses and the union demands more benefits and featherbedding at the first sign of profits

Toyota Diverging & GM Converging !

While G.M. is closing its factories in its native country, Toyota is opening its new plants in North America. This is because:

It offers customers cars that are less expensive and less trouble to own, over the life of the cars.

Toyota's don't break as much and perform well.

GM vehicles require more repairs and don't age well.

"Wake up America and Buy American"

The native slogan "Wake up America and Buy American" of GM may not affect the future of Toyota in the US market.

Thanks to big bonuses to executives, outsized fringe benefits for the UAW, poor product quality and just plain arrogance GM and the UAW have lost the loyalty of American car buyers.

Americans are not protectionist in their buying habits, and GM executives and the UAW have lost the trust and loyalty of many younger car buyers.

Toyota Tundra

The full-size pick-up truck segment is considered to be the most profitable and the fastest-growing segment in a slow-growing US automobile industry.

Highly competitive with players like Ford and General Motors dominating the industry.

The World’s largest Company-2011, Toyota, aimed to increase its share in the light truck segment through the launch of a new pick-up truck model in early 2007, called Tundra.

Toyota Tundra

Toyota Tundra

In the market for pick-up trucks, the buyers were known to be tremendously loyal to trucks made by American companies.

in its efforts to market Tundra, Toyota promoted the pick-up truck at events considered to be traditionally American such as NASCAR racing, fishing tournaments, country-western concerts, etc.

The company also made an investment of $850 million to establish a new plant at San Antonio, Texas, for manufacturing only Tundra vehicles and set a sales target of 200,000 units in 2007.

Toyota Prius

Due to constant Innovations in Technology and Increasing fuel prices, Toyota has Innovated the first Hybrid vehicle in 2008, Toyota Prius, having dual power consumption operating on Petrol and Electric engine.

The company has placed it in the Segment between Corolla and Camery and Marketed it as of a Higher Segments.

Toyota Prius

Threats for Toyota Motors

Gasoline price rise. With becoming big it may be difficult to have

effective control over quality. Vehicle quality has slipped in some places, and it

has developed its own arrogance. With the full size heavy pick up, it assumed it could

command the kind of premium it does on cars, and introduced too many vehicles with to many options‘

Its trucks are simply too costly. It has to earn the pick up truck market, and it

assumed otherwise.

Toyota

Whether it is due to wits or good fortune, Toyota will become the No.1 car company in the U.S. sometime in the next year, and an American car operation will never hold that position again.

— Douglas A. McIntyre(former Editor-in-Chief of Financial World Magazine

and president of Switchboard.com)

Sony and Toray

Global Strategy

At a time when global competition is intensifying, Sony and Toray, using different strategies, remain internationally competitive.

Sony has continued to supply innovative products to the global market.

Toray has ensured that procurement, production, and marketing are carried out in the most appropriate locations in the world.

In a word, the former adopted the global-products strategy while the latter decided on the global-operations strategy.

South Korea

Samsung

Continuing with its strategy of flooding the market with new gadgets, Samsung recently unveiled a plethora of mobile devices and PCs ranging from Smartphone, tablets, & phablets to smart cameras & ultra books.

The multiple announcements included updates to some of Samsung’s best-selling existing models such as the Galaxy Note as well as new product launches such as Series 5 and Series 7 Windows 8 tablets and a ATIV S Windows Phone 8 Smartphone.

Samsung

The past year has seen Samsung gain a lot of share in the Smartphone market. Its market share has doubled to more than 36% in Q2 2011 from about 18% during the same period preceding year.

Currently it is the Global Market leader in Mobile Phone with record +35%.

While Samsung has had a lot of success in the low-end of the market, it has been gradually increasing its presence in the high-end Smartphone market as well.

Samsung Vs. Apple Inc.

Samsung Vs. Apple Inc.

Its main rival in the US had been the World’s most valuable company in the History, Apple Inc.

Its huge lead over Apple in the second quarter of 2012, when it sold nearly twice as many Smartphone as Apple, was partly driven by the success of the Galaxy S III which sold more than 10 million units in under two months !

Its success can be attributed to its much larger portfolio of Smart phones that address more market segments than what other popular Smartphone such as the Apples' iPhone do.

But Apple’s patent win could cause a strategy shift

However, Apple’s recent patent win in U.S. worth $1.05 billion in compensation threatens to stop Samsung in its tracks.

Having proven to the court that some of Samsung’s products infringe upon its patents, Apple plans to use this as a precedent to press further charges against Samsung.

It has already filed an injunction to ban the sale of eight of the patent-infringing Samsung devices in the U.S.

If Apple succeeds in doing so, Samsung may see only a limited near-term impact considering that these devices are fairly old and are nearing the end of their product cycle.

Post Impacts of Apple’s Patent War

While, in the near-term, this has little impact on Samsung’s strategy of flooding the market with new similar-looking products, eventually it will have to start focusing on designing its products to look different from Apple’s.

This might cause delays in getting new products out in the market but it is difficult to say how much that will impact Samsung in the long-run considering the R&D resources it has at its disposal.

Post Impacts of Apple’s Patent War Apple’s use of design patents can also cause Samsung

to divert some of its resources to competing mobile ecosystems such as the Windows Phone.

However, that would mean a return to ground zero for Samsung considering that Windows Phones currently command only about 3% market share.

Eventually, we might have Samsung concentrating on Android for low-end Smartphone (where Apple has little interest) and on other platforms such as Windows Phone for high-end ones.

This would prevent Samsung from leveraging its growing clout in the Android market and put a cap on its market share growth potential in the future.

Vizio Vs. Samsung-L.G.

The US Electronic Company Vizio is giving a steady competition to the S. Korean Giants LG and Samsung.

Vizio –U.S. brand – it sells its electronics such as HDTVs for lower or comparable prices to LG and Samsung.

Employees of stores such as Wal-Mart say that it sells just as well as the other TVs and customers do not come back with problems.

Other South Korean Companies To Capture the US market the Korean

companies LG, Samsung, Hyundai, Kia and others are focusing upon delivering Quality with a Competitive Pricing strategy.

Still, the problem of Inflation can cause the Increased Cost of Production and Exports for them.

South Korean Companies in US

India

Information Technology Outsourcing Expensive and Lesser no. of IT-

Professionals call for Outsourcing to other Countries.

India Outsources 56% of World’s IT business.

Low Costs and availability of World’s maximum number of English Literates encourages the outsourcing for the US companies to India.

TCS, Tata Consultancy Services, Infosys, Wipro, Mindtree etc. are major Indian players in the IT Industry.

US Companies Outsourcing to India

Mastek Limited: It is a premier P-CMM Level 3 and SW-CMM Level 5 company which provides outsourcing in a number of segments like finance, banking, analytics, and logistics and so on. It has been in operations since two decades.

Orcim Soft, Inc.: It offers a major portion of outsourcing jobs to India in various sectors. The main areas of expertise include software development, solutions in information technology and so on. The company has offices in various countries like United Kingdom, US and so on

US Companies Outsourcing to India Well known global banks and financial

organizations like CITIBANK, JP Morgan, GE Capital.

IT giants like IBM, Microsoft. Some more well known companies which

outsource to India are:Oracle, Dell Computer Support, Hewlett Packard, Schlumberger, ATT Wireless, Texas Electronics, TransUnion, Rand McNally

TATA

TATA- Nano U.S.A.

India's biggest carmaker by revenue is increasingly dependent on its UK premium car subsidiary Jaguar Land Rover for growth to offset weakness in India.

Hence, for making the Product global, U.S. is a market that the company is looking for.

The company is looking to launch a next-generation version of its Nano, the world's cheapest car, for the US market in about three years.

Nano for the United States is planned to have a bigger engine and more features, and to sell for under $10,000.

TATA- Nano U.S.A.

International Institute of Professional Studies, DAVV.October 26, 2012.

Submitted to: Dr. Prerna Kumar.