Global Marketing

Introduction

The world is increasingly becoming a global village. Markets are expanding as companies increase both in number and in stature. The need for better quality products and services has led to a healthy competition between global players willing to capitalize on different international markets. Global marketing is thus premised on two fundamental concepts: needs for products and services and the international marketing community. Svend defines it as “the process of conceptualizing and then conveying a final product or service worldwide with the hopes of reaching the international marketing community” (2013). When global marketing is done correctly, it has the potential to raise a company’s status and guarantee profitability over the long term.

There are a number of external forces that must be considered in order to assess the viability of launching a company in an international market. These macro environment forces are identified using the PESTLE mode of analysis. This mainly represents the Political, Economic, Socio-cultural, Technological, Legal and Ethical factors that may be key to the success or failure of an international venture. The analysis leads to identification of opportunities and threats and serves to give an organization a viable course of action to chart. The most important considerations when conducting a PESTLE analysis are: the identification of external forces, identification of the forces that might change in the future and defending against threats while capitalizing on opportunities better than competitors. The overall use of the assessment tool is in determining the viability of a market by gauging the apparent threats against the inherent opportunities. Therefore, after conducting a thorough PESTLE analysis on a market, a company might declare it unworthy for investment.

UK companies have continued to perform well in the areas of innovation and technical expertise according to Dawe (2013). Some of the companies that he highlighted are not household names but however compete on a higher level than their peers. Renishaw, Delmatic and DC Electronics have been considered as requiring applause as they have successfully captured significant chunks of the global market despite their relatively modest standing. In this paper, a PESTLE analysis of Renishaw will be conducted with the intention of highlighting the technological and socio-cultural forces that could converge to make it a success or failure in an African country. Dawe (2013) asserts that while other companies have relied on the favourable conditions in the UK like the support of UK Trade & Investment (UKTI), a government department created to boost trade, Renishaw has widened its scope and instead focused on lean manufacturing, innovation and a focus on its international customers in order to satisfy their needs and continue to grow. The company relies so heavily on international markets that only a meagre 6% of sales are realized in the UK with the rest spread across the globe; from China to the US. Subsequent discussions on the company will give more insight into the specific macro economic factors that have improved sales for the company.

How could technological factors affect Renishaw’s establishment?

There is an avalanche of process problems that have rocked many manufacturing firms which have had serious effects on the cost of production and in turn the ability of a company to be competitive. Manufacturing is not as viable in the developed world, like the UK, as it is in the developing world like in Africa. Re-work, scrap levels and machine downtimes are some of the more common technological factors that have been a headache to manufacturing. It has been argued that these are not the underlying problems that bedevil manufacturing but are symptoms associated with the intervention of humans in machine operations leading to variation of processes and inadequacy of capabilities especially in areas where the workforce is not skilled. Presently, there is a measure that is widely used to determine the performance of machinery against an industry benchmark rather than on home-grown measures. The measure, the overall equipment effectiveness (OEE) has been widely used by Renishaw to optimize its machine operations and thus reduce wastage (Saunders, 2008). Many companies have opted to buy Renishaw products as they are key in optimizing performance of machinery. The company is geared towards ensuring that all machinery achieves high OEE scores and in turn reduce costs by reducing wastages caused by minor stops and machine downtimes. The maximization of machine output so that they offer quicker lead times and is able to tackle higher value works are some of the factors that have been at the heart of Renishaw’s innovativeness. While there may be critics of the measure of performance, it is premised on both the minimization of waste and the maximization of efficiency which are the pillars of six-sigma and lean manufacturing (Basu, 2011). The fact that the company has developed these systems could mean that its operations in Africa would be a profitable venture.

The company has a wide range of products. Although some of these products may closely resemble those of manufactures, Renishaw guarantees that they are more efficient and are less wasteful. Some of the competitors already have established bases in the African continent which might be a barrier for Renishaw’s entry. The company has developed the Productive Process Pyramid (PPP) that makes manufacturing stable and processes right (Saunders, 2008). This innovation ensures that there are steps that can be individually implemented by individual consumers something that other competitors do not have. However, to gain the envisaged maximum benefits and achieve a perfect OEE, the company advices that all steps be taken. These steps are grouped into four broad categories including: Machine calibration and geometry which encompasses the first three steps, setting processes which encompasses levels 4 through to 6, adaptive machining and process control which encompasses levels 7 to 8 and part verification and measurement uncertainty which has levels 9 and 10 and finally assessment of environmental stability (Saunders, 2008).

The company has ensured that its products, both in Gloucestershire headquarters and in Ireland and South Wales are more efficient and smarter. Dawe (2013) highlights that the company started small and then changed as the market did. This means that the technological barriers that may be encountered by the company as it sets its bases of operation in Africa would be easily overcome due to experience and superiority over competitors already in operation. Dawe records that Renishaw started with a borrowed printer and two desks 20 years ago in China and has now grown to an annual generation of £75m in sales. Whereas there was a limited range of products that the company specialized in, the need for automation has necessitated the diversification of the product range from the original high-end laser calibration products that were primarily sold to government departments and universities to more technical components.

The company’s head of communication, Chris Pockett, asserts that their continued investment in research and development has had a significant influence on the innovativeness of their products. In the past year alone, they invested over 14% of their revenue in researching and developing more products and technical aspects on these products. He further asserts that the company uses smart ways in order to make smart products that helps it reduce its costs considerably. As an example, he says that their Gloucestershire headquarters machine shop has a machine to worker ratio of six to one. Renishaw’s growth was hampered by the 2009 global economic crisis but managed to bounce back from a workforce of 1,850 to a current one of 3,300. Pocket further asserts that there was a temptation to deal with distributors but that fizzled out when they realized that they had to be on the ground to ensure that their products were performing to the best of their capabilities. Thus, it became prudent for the company to be on the ground since they could not trust distributors to understand the machinery and their customers like they did. He points out that the challenges continue to increase with the company having grown in 32 countries where 60 offices are run.

What are the socio-cultural factors that could affect Renishaw?

Renishaw operates in an environment that involves the use of machinery. This means that there are many health and safety issues that the governments in the areas the company operates regulate (Cheverton, 2005). During the formative years of the company, this was a major problem as resources were scarce. However, the company has grown in stature and has taken the opportunity to improve its own health and safety procedures in order to minimize losses that arise from accidents. Renishaw has a corporate health and safety policy that ensures that all accidents, however minor, are reported and documented. In 2012, for example, the company recorded total of 3,235 accidents between its 161 employees which translated to 0.05 accidents per employee. Although this figure is small, it marked a 16% reduction in accidents from the previous year despite having an increase of 8% in staff. The ratio of accidents per person also decreased considerably considering that 70% of the accidents recorded were classified as minor. There was an accident in 2012 in a stone site that was investigated by the HSE (Health and Safety Executive) following the company was fined £7,000 for handling dangerous substances and also for the costs associated with the accident. Such reports, although rare, have the capability of running the company down due to litigation and fines.

There is a shortage in the number of engineers that can accurately do the job as per the requirements of Renishaw. Therefore, the populations in the areas of operation perceive the company as having a social responsibility to nurture the education of the population it intends to serve. This is one of the factors that could greatly inconvenience the company if unattended. The population may develop a negative attitude towards the company’s products meaning that it may lose the goodwill of local communities. However, this could not be a problem for the company as it has had collaborations with local colleges in the UK and has even offered some students a gap year in their facilities. Renishaw has also ensured that it participates in teaching coding to primary schools in the Gloucestershire. Additionally, the company has been involved in encouraging women to join the engineering fraternity as only 6% of engineers are women. All these initiatives are commendable. However, they are only concentrated around Gloucestershire and not the rest of the UK. Furthermore, there is no literature to suggest that similar projects have been established and are ongoing in all other frontiers that the company currently operates. Considering that only 6% of total company sales are realized in the UK, it is expected that the company would have more efforts in other countries. Moreover, as the sales are not confined to Gloucestershire, one would expect that the company initiatives would be open to students and schools from all round the kingdom to avoid being perceived as a regional company.

Summary

Renishaw is a company on the rise. The market share it presently commands suggests that it has read the global market well. Global marketing is a complex process as it usually involves the translocation of a company’s designs, processes and culture from one place to another. This case study focused on a plausible scenario where the company would wish to expand its operations to the expansive Africa which is the fastest growing technological hub. A PESTLE analysis showed that technological factors that would arise would be opportunities for the company as any competitors operating in the continent would not have advanced systems as Renishaw does. On the socio-cultural factors, there are many need gaps that the company would be required to plug in order to be seen as upholding its corporate social responsibility. Education is one of the key areas that the continent lags behind in as well as safety and health sectors. Since the company has demonstrated competencies in these sectors in saturated markets, the conclusion would be that considering operating in Africa would be considering an opportunity.

References

Basu, R. (2011). Fit Sigma: A Lean Approach to Building Sustainable Quality Beyond Six Sigma. New Jersey: Wiley

Cheverton, P. (2005). Key Marketing Skills: Strategies, Tools and Techniques for Marketing Success. London: Kogan Page Publishers

Dawe, T. (2013, October 14). Size no obstacle as the best of British expand their horizons. The Times. Retrieved from http://www.thetimes.co.uk/tto/public/futureofengineering/article3894245.ece on 11th Dec, 2013

Saunders, M. (2008). Building the pyramid – Renishaw. Retrieved from resources.renishaw.com/download.aspx?lang=en&data=10046‎ on 11^th Dec, 2013

Svend, H. (2013). Global Marketing, 6th edition. London: Pearson

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