Thanks to the new communication technologies of the 20th century, big firms have moved from local or national market to international markets. Most of the important national firms have perceived foreign markets as new opportunities to increase their turnover.
A firm wants to launch its products in foreign markets when the local market has become saturated. When most of the potential customers have been touched by the product, the firm has to find some solutions to increase its revenue.
First, if the firm wants to stay in its national market, it has two main choices. It can make efforts to penetrate the market deeply, that is to say to win competitors market shares. The other solution is to develop a new product in the same market to increase the turnover via another method. Secondly, the firm can try to work in foreign markets. If the firm enters a new market with the same product, we have to create a market development strategy. Some times, foreign markets are real opportunities for firms because the groundwork has been done. In addition, as it is an emerging market, competition is not stiff Maybe there is no competition at all so, more and more profitable firms decide to export their products.
[...] The firm was very well prepared to face the cultural gap between western culture and the Chinese one. PSA was very patient and had created links with China 10 years before the creation of the very big plant in Wuhan. In addition, PSA has studied China, very well from an economic point of view, from a political point of view and from a cultural point of view. These three points represents the keys of PSA success in China. From an economic point of view, we can say that the French firm is very reactive because it has understood since the 80's that China will be the future's big emergent nation. [...]
[...] To capture the market, PSA took the choice of producing cars for China in China. Effectively, there exists in China a high protectionism with a tax of 25% on every product which enters the country. What's more, as the Chinese buying/purchasing power was still very low,it would not have been possible to be competitive on the market, with European production costs and Chinese taxes. So, PSA decided to create a plant in China, to avoid taxes and to profit from the low production costs. [...]
[...] In this part, we will analyze how PSA has succeeded in its introduction in the Chinese market. We will lay the emphasis on the importance of the cultural awareness present in this emerging market. The introduction of PSA in Chinese market As we have said, PSA had understood 20 years before that Chinese car market represented a main opportunity for long term development. In order to enter this market, PSA had to analyze Chinese culture, from an economic point of view, from an ethical point of view as well as from a political point of view. [...]
[...] It was a terrible mistake in their management because the employees went very quickly on strike. The American giant lost much money and had to accept the creation of unions inside the firm. Furthermore, Wal Mart's image suffered . So, we see that Citroën has proceeded democratically with its employees, giving them at the same time a right (to create unions) and a duty (to be rigorous). It appears to be a good choice to mix cultures. Concerning the employees, Citroën has perceived the need of security for the Chinese workers. [...]
[...] will deal with those firms which want to be international. We will evaluate the risks and the opportunities to become international or multinational. We will lay the emphasis on the fact that culture must be taken in consideration to succeed in a foreign market. Culture is everything which is not tangible (art, religion, way of life, habits, food, values, rules . Culture is made of two concepts: the core value (what people learn from his birth to his ten years old) and experience. [...]
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