In a universal context, economic system of production, resource sharing and distribution of good and services within a society or a given geographic area. It consists of various individuals, institutions, agencies, entities and government. It is complex structure of decision-making, consumption patterns and resource allocation.
These economic systems can also be categorized as a social system. The mode of production is a related concept. All economic systems are in place to address the fundamental economic questions such as what to produce, how to produce, how much to produce and who receives the production.
Mainly the interaction between the different components in the structure is explained by the economic system. The analysis of economic systems conventionally concentrated on the dichotomies and comparisons between market economies and planned economies and focuses on the other dimensions such as capitalism and socialism. The dichotomy categorization and analysis has become obsolete due the fact that the economic systems have expanded into incorporate other topics and models that cannot be simply explained, today the dominant form of economic organization at the world level is based market-oriented mixed economies. One field that cuts across them is comparative economic systems, which includes different categorical subsystems.Every economic system allocates resources for exchange, production, distribution and consumption.
The system is stabilized through a combination of threat and trust. These are the institutional arrangements. An economic system consists of the following sub systems.
Methods of control over the factors of production or means of production1. A decision making system 2. A coordination mechanism3. An incentive system 4. Organizational form 5.
A distribution system6. A public choice mechanism for law making, establishing rules, norms and standards Economic systems are normally segmented by their property rights regime for the means of production and by their dominant resource allocation mechanism. An economic system is a way of providing solutions to the basic economic questions. 1. What to produce2. How to Produce 3.
When to produce4. To whom to produce5. At what quantity to produceThe table 1 describes the four type of economic systems under the purview.Socialist state that that the economic justice can exist only, if the government controls the centers of economic power or by the public as whole. Under Centrally Planned Socialist Economy, the government uses its powers to redistribute wealth and provide extensive services to the general public. Any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution.
1. Sweden2. DenmarkA centrally planned economy is an economic organization in which the state or government takes the economic decisions rather than these being made by the interaction between buyers and sellers / businesses. Unlike a market economy in which private citizens and business owners, make production decisions, a centrally planned economy controls what is produced and the distribution of the products and services and use of resources. State-owned enterprises take on the production of goods and services. .
Countries, which follow market socialism as their economic system, are as follows:1. Soviet Union2. China3. Vietnam4. CubaMarket socialism permits market allocation policies within an overall environment of state ownership. For example, China gives freedom to businesses and individuals to operate in a market system.
Countries, which follow market socialism as their economic system, are as follows:1. Socialist Federal Republic of Yugoslavia 2. Demark3.
Finland4. Canada5. Belgium6. Hungary1. Market CapitalismCapitalism is an economic structure in which private individuals and businesses hold capital goods.
The production of goods and services is based on supply and demand in the general market rather than through central planning economic structure. Countries, which practice market capitalism, are as follows:1. Hong Kong2. Singapore3.
New Zealand4. Switzerland5. Australia 6.
Estonia7. Canada8. United Arab Emirates9. Ireland10. ChileThe main difference between capitalism and socialism is extend of government involvement in the market. The capitalist economic model allows free market forces to drive innovation and wealth creation.
The socialized economy incorporates factors of centralized economic planning. This will ensure that there is equal opportunity and economic outcome.Free market economies are originated on the assumption that people seek to maximize their wealth while companies’ aims to profit maximize. Every individual will act on their own best interest when it comes to consumption of goods and services.
In capitalist economy, assets, properties and businesses are owned and controlled by individuals. In a socialist economy, the state owns and controls the major means of productionQuestion 2 a. Discuss the analytical techniques used by global marketers.
When is it appropriate to use each technique?Demand Pattern AnalysisIndustrial growth patterns gives insight into market demand. This analysis reveals consumption patterns and production patterns that are useful in assessing the market opportunities. Furthermore, trends in manufacturing production indicate potential markets for companies that supply manufacturing inputs.
Income Elasticity MeasurementsIncome elasticity explains the relationship between demand for a product or service with the changes in the income. This is based on the corollary of Engel’s law, which describes that as income rise, smaller proportions of total income are spent on food. Demand for hardwearing consumer goods (Durable) such as furniture and appliances tends to be income elastic, increasing relatively faster than increase in income. Cluster analysisThis analysis groups variables into clusters that maximize within group similarities and between group differences.
Cluster analysis is well matched to global research due to the similarities and differences can be established between local, national, and regional markets of the world.Regional lead lag analysisRegional lead-lag analysis forecasts what could occur to the pattern of demand in a considered country based on the patter of demand in a leading countryMultiple factor indicesMultiple Factor Indices indirectly measure potential demand using variables that are either intuition or statistical analysis suggest so that it can be closely correlated with the potential demand for the product under review.b.
Compare and contrast standardized, concentrated, and differentiated global marketing. Illustrate each strategy with an example from a global company Global Standardized MarketingGlobal standardization in marketing is a standardized marketing approach that can be used globally. This strategy is known to work across different cultures and countries to market a product.Concentrated Global MarketingConcentrated marketing strategy is targeted to one specific market segment or particular product.
This strategy is often targeted to smaller group of people because they are designed to attract a specific segment.Differentiated Marketing StrategyDifferentiated marketing strategy entails tailoring the goods and marketing efforts to the local population. Differentiation in terms of some unique feature, colour, shape, design or shape.There are 5 Differentiation strategies identified. They are as follows:1. User experience strategy – This strategy is about meeting the customer / client needs and wants in the most effective and enjoyable way.
Mostly depended on the design and the features of the product. 2. Customer service strategy – When customers have an amazing experience, they share it and attract more customers.
American express carried out a research and found that those happy customers will tell eight people while unhappy customers will tell 21 people. 86% of consumers quit doing business with a company because of bad customer experience. 3. Product Differentiation Strategy – This is a marketing process to display the difference between products.
Differentiation looks make a product more attractive by contrasting its unique qualities with other competing products. A successful product differentiation creates brand loyalty among customers.4.
Price quality differentiation – This is simply giving exceptional quality products and services so that creates a brand value among customers. People prefer exceptional products to other low quality products. People pay more the high quality products. For example, 5. Technology Differentiation – This what IT and Electronic industries specialize.
Creating technologically superior products so that customer’s first choice would be choosing their products.PART B Critically evaluate the international marketing strategy of a company of your choice. It is expected that your company will be a major multi-national company operating in most of the major markets of the world.Tesla Inc. (Tesla Motors)Tesla Inc.
(formerly Tesla Motors) founded in 2003, is an American multinational organization located in Palo Alto, California. It specialize in electric vehicles, lithium-ion battery energy storage and solar panel manufacturing. Martin Eberhard and Marc Tarpening founded Tesla in 2003. The company also considers Elon Musk, JB Straubel and Lan Wright as co-founders.
The founders were motivaed to commence the company when General Motors recalled and destroyed its EV1 electric cars in 2003. The co-founders Martin Eberhard and Marc Tarpening, named the company after the electrical engineer and physicist Nikola Tesla. In 2010, Tesla offered its initial public offering (IPO) on NASDAQ. 13 million ordinary shares were issued to the public at a price of USD 17 per share. The IPO raised USD 226 Million.
The company’s motives for international growth The founders were motivated to commence the company when General Motors recalled and destroyed its EV1 electric cars in 2003. Tesla operates multiple production and assembly plants, notably Giga factory near Reno, Nevada and main vehicle manufacturing facility at Tesla Factory in Fremont, California. The company’s Model S was the world’s best-selling electric plug-in electric car in 2015 and 2016. Model S reached 200,000 unit sales milestone in international sales during the fourth quarter of 2017. The company enjoys various types of federal and state subsidy, during 2015, it was an estimated amount of USD 30,000 for each vehicle sold. Cumulatively it amounted to USD 4.
9 Billion.The markets targeted Tesla aims to change the automotive industry by creating many innovative pieces that fit together; the strategy was called “complex coordination”. Its marketing, finance, production, sales and technology strategies are all exceptionally different from its competitors.
Tesla’s automotive strategy is to match distinctive technological-product life cycles and initially target wealthy buyers. It then entered into larger markets at lower price points. The technology for the battery and electric drive train technology are developed and paid through the sale through sale of earlier models. Tesla mainly produces 4 models to target 3 markets. The models are roadster, Model S, X and 3, these are targeted to serve the low priced automobile market, the luxury market and the high volume market.
Tesla states that new technology in any field takes a few versions to optimize before reaching the mass market, and in this case, it is competing with 150 years and trillion spent on petrol cars. Tesla international sales passed 250,000 units in September 2017 and its 300,000th vehicle was made in February 2018. Its top selling car is the Model S, with global sales about 200,000 units between June 2012 and December 2017.
Model X with about 70,000 units sold between September 2015 and December 2017. Model 3 was produced 1,700 units in 2017. The roadster sold around 2,400 units.Model S MarketModel S deliveries commenced on 2012. First sale to Europe took place in August 2013 and in China in 2014. Right hand drive model introduced in following international markets UK, Australia, Hong Kong and Japan in 2014.
The United States of America is the leading market for model S with estimated sales of 120,000 unit in 2017. Norway ranked the largest overseas market as of November 2016, due to country’s comprehensive incentives for the adoption of pure electric cars. For European Market, Tesla reassembles and distributes the model S from its European Distribution center in Tilburg, Nether lands.Model X MarketTesla Model X is a full sized sport utility vehicle with a lightweight aluminum body. It is offered in 5,6 and 7 passenger seat configurations. One of the notable engineering design is the gullwing doors.
(the vehicle doors open vertically). International sales totaled to 25.312 units in 2016 and 46,535 in 2017. The Unites States of America is the main market with an estimated of 40,000 units in December 2017. As of 2016, September the Model X ranked the top selling plug-in electric car in Norway, previously this was the Model S. Model S was the top selling car four times.
Sales during the first quarter of 2018 totaled 8,182 units. In 2018 Juanuary, the Model 3 has remained the top-selling plug-in passenger car in US each month.Model 3 MarketThe Model 3 is the Tesla’s third-generation car. The standard model 3 as estimated by the Environment Protection Agency rated the Model 3 electric range of 220 miles (350km) and the long range model delivers 310 miles (500km).
Tesla reported over 320,000 reservations for model 3 order, This generated a sales of over USD 14 billion. The unveiling of Model 3 was unique in the 100 year history of mass market automobile. The methods of market entry The Marketing Mix Model is given belowProduct Price(Automobiles)Model SModel XModel 3 Different prices targeting different marketsPlace PromotionBranded StoresFlagship Stores Mass media advertising campaignsYou tube promotional videosSocial Media campaigns(Facebook, Instagram ; Snap chat)Main stream media advertisingE. Jerome McCarthy created the Marketing mix in 1960. This is a categorization that been used throughout the marketing world. Marketing mix is about putting the correct product and products in the correct place at the correct time and at the correct price.
Therefore, it is important to implement this plan; every aspect of the business plan should be studied well. This can be applied to Tesla’s scenario as follows: Tesla uses Low price and high price strategies to enter the market. ProductsTesla is known for being able to produce creative and innovative products to the electronic automobile market. Their products are unique and unlike other products in the market Tesla products have an eye catching look and a design.Eg: – Model S , Model X , Model 3 PricingDifferent prices targeting different markets with different models.
Roadster was produced in low volume and priced at minimum USD 103,000 targeting a niche market and satisfying that niche market’s needs. Model 3 is produced in high volume and priced at a competitive targeting the mass market. Model S and Model X are produced with premium advanced functions and targeted to the rich and wealthy (Luxury market).
PlaceAs of 2016, Tesla has opened and operated around 260 galleries and retail locations in the United States of America. Tesla also has retail shops in Dubai and South Korea. Tesla opened its first store within a store, a small outpost within the Nordstrom’s department at the Grove shopping mall in Los Angels. The stores serve as a showroom so the consumers can learn about the company and its website.
Promotion Tesla heavily into promoting via social platforms. In 2017, Tesla had a USD 52 million budget to be used as a referral program and word of mouth to attract buyers. Customers mainly buy tesla vehicles from the website.