Cultural Marketing Assignment: Evaluating Case of Magnox Ltd

Question

Task: An individual 3000 word (+/- 10%) critical, structured business report on cultural marketing assignment is required on the key issues contained within the module, based on an organization of the student’s choice.

Answer

Introduction
Globalization has created the opportunity for the business organizations to enter the international market and to offer their products to the different market segments. The primary objective of cultural marketing assignment is to understand the nature of marketing across various cultures. In this report the nuclear reactor manufacturer Magnox ltd. has been taken into consideration. The company operates in the UK market and thus it is targeting the new market segment of Japan. Japan imports nuclear reactors from the UK market. Therefore the demand of this product is high in the Japanese market. That’s why the manufacturer has decided to penetrate the host country or Japan from its home country UK.

Section 1: Cross culture analysis (CCA)

Objective:

• To understand the range of the cultural variation that exists in the different market segment.
• To evaluate the theories those are subject to explain the nature of cultural variation.

The CCA rationale
The cross cultural analysis is very much important to understand the differences of human behavior and thoughts on the cultural context. This is actually a systematic comparison between the different cultural outcomes. In this study, it has been mentioned that Magnox ltd that operates in the UK market, has aimed at Japan market. As the nuclear reactors are imported by Japan from the UK market, thus the new market segment of the organization is reliable for building trading relationship. The cross cultural analysis has been taken under consideration also to verify the relevance of the Hofstede’s cultural theory in this type of product.

Application of Hofstede’s cultural dimension theory
Key characteristics of the theory
This theory has some keys that determine the cultural behavior of the people. The cornerstones of this theory are the dimensions that are mentioned below-

• Power distance index.
• Individualism index.
• Masculinity index.
• Uncertainty avoidance index.
• Long and short term orientation index.
• Indulgence index.

Power distance index
Power distance is such an index that determines the utilization of power in the organizations. This dimension clarifies the importance of hierarchy system in the organizations (Xuet al., 2019). High power distance refers to the usage of title and ranks in the workplaces whereas low power distance reflects that the organizations focus on the performance rather than the rank and order.

Individualism index
Individualism index prioritizes privacy and freedom of the individuals. The organizations believe that the employees must be given free spaces to enhance their performance. On the other hand low individualism index or collectivism refers to the combine effort of the team members. Individual performance is placed after collectivism.

Masculinity index
The organizations where the masculinity index is high, the roles of men and women are specific. They are very concentrated to their objective and tasks. As per Jiang (2019), profit and productivity of the organization is primarily focused and people confront openly. Low masculinity index or high in femininity refers to the priority of the mental health of the workers. Problem is solved by negotiation.

Uncertainty avoidance index
Challenges are quite common at the workplaces and it arrives without any notification. The organizations those are ready to accept any kind of challenges have a low uncertainty index. High index reflects that the organizations do not allow the sudden changes in their policies to avoid the uncertain circumstances.

Long term and short term orientation
Time horizon plays an important role in determining this index. Long term orientation reflects that the organizations focus more on the analysis of the project and believe that quality should not be compromised (Litvin, 2019). Another side or short term orientation reflects that the organizations focus on the brief of the assignment. Deeper analysis is avoided in order to undertake more projects within the periods.

Indulgence index
Indulgence is such an index that determines the level of gratification in the society. High indulgence index shows that people mingle in the society with liberty and the freedom in the society is positively influence relation building in people. Low indulgence index reflects the conservative side of the society.

Evaluation of the theory (advantages and disadvantages)
Hofstede’s cultural dimension theory also has many strengths and weaknesses. According to Xuet al. (2019), the strength of this theory is the tendency of deeper analysis. This model focuses on the identification of the root of the cultural elements. As per Clifton and Dai (2020), the model had segregated the dimensions on geographical regions. That’s why the multinational companies can easily identify the attribution and thinking pattern of the employees. The reason behind such behavior is also revealed in this theory. The major weakness that the theory includes is that the concept of the theory sticks to the orthodox structure of culture (Zeitzen, 2020). It denies that culture may be changed due to the influence of the globalization. Another prominent drawback of the theory is biased result drawn from the research on the extremely small sized sample. Hofstede’s cultural dimension theory believes that all the people in the sample behave in the same way- which is not justified.

Cultural differences of the UK and Japan
Hofstede’s cultural dimension theory has been taken under consideration to compare the cultures of the two countries those are associated to the business chain of Magnox. Before entering the Japanese market, the company must have proper evaluation and analysis of the new market segment. By identifying the culture of the host country and by examining the difference in the cultures, the company would be able to develop the proper plan and strategy to have a successful outcome.

In the power distance index, Japan has beaten the UK by securing 54 scores whereas the UK scored 35. This index reflects that power distance is high in Japan and the Japanese organizations believe that only the higher authority has the right to decision making. In the home country of Magnox, the thoughts of the employees are accepted widely in order to encourage them to include innovation in their work.

Individualism index shows that UK with 89 scores has beaten Japan (46). In the UK firms the employees keep themselves engaging in the developing their own skills. They are more focused on the versatility of their performance and do not depend on others while this behaviors and way of thinking is missing in Japan. The Japanese people focus on collectivism or group performances. They enhance the overall performance and productivity by integrating their skills and knowledge. One of the major causes of this difference is that the UK is the pool of cultural diversity whereas in Japan the majority of the employees belong to the same cultural background.

Masculinity index is high in Japan (95) than the UK (66). Japan is a country where the work profile of male and female rarely interact to each other whereas the UK culture shows fewer gaps in gender work profile. Japan focuses more on the materialistic goal and the high profit margins and in general high masculinity index also implies that men occupy the higher rank in the organizations. But the UK culture is not biased to the male category rather it focuses on the talent.

Uncertainty avoidance index is higher in Japan (92) than in the UK (35). Due to the mix up of the various cultural thoughts, challenges and changes are quite common in the UK. People in the UK organizations are accustomed to the changes and they can easily adapt to the new situation. But the high uncertainty index in Japan shows that they are not accustomed to the new changes. That’s why they nurture the static mentality among themselves in order to avoid the risk.

Long term orientation is Japan is higher (88) than the UK (51). In the Japanese firms the assignments those are undertaken are developed through long run and the outcome is generated in a continuous process. The UK with low score shows that the organizations do not prefer to devote the time in a single project. Short term goal is selected in order to have quick results. On the other side, the short term orientation also eliminates the lethargy and monopoly in the organization and thus expands the way of further recruitment.

Indulgence index shows that the people in the UK are very liberal as the UK has more scores (69) than Japan (42). People in the UK like to build social relation among themselves and the social structure of this country is very flexible. People feel friendly while socializing. But the Japanese culture does not allow this type of social gatherings. They prefer their customs and believe that the elders must be respected in the party.

Summary of findings
In the above findings it has been noticed that the two countries have lots of cultural differences among the society and also in the workplaces. Hofstede’s cultural dimension theory has thrown light on the six elements of cultures. The theory is justified in order to understand the market nature and the thoughts of the employees. In the study, it is clearly visible that the UK culture is much more individualistic by nature whereas the Japanese culture believes in creating groups. As the study has emphasized on the overseas business of nuclear reactor manufacturer Magnox ltd, the difference between the two countries has been analyzed through the model.

Section 2: Social and cultural factors and marketing mix
Objective

• To examine the viability of the social and cultural behavior on the business growth of the organization.
• To evaluate the strength of marketing mix in penetrating the Japanese market.

Definition of culture
Culture refers to the blend of knowledge, belief, art, morals, customs and habit acquired by the people of same community. In Hofstede’s cultural dimension theory the elements of the culture has been segregated on the geographical regions. It is also believed that the cultural pattern of the society differs from the political, legal, religious, economical perspectives.

The cultural framework and its application
The purchasing parity of the consumers can be evaluated through the cultural framework by Terpestra and Sarathy. This cultural framework highlights the influential factors that determine the fate of the product. Values and attitudes are the major factors that influence the purchasing behavior of the customers. Japan is very concerned to the environment, that’s why the power plants in this country are demanding for nuclear power supply to mitigate the adverse effect of global warming (Chamberset al., 2020). Magnox may target the value of the custodian behavior. Education is another factor that also triggers the growth of the business. In 2018, the reported literacy rate in Japan was 99% (Dinget al., 2019). This implies that the people in the country are well acquainted to the latest technologies. Terpestra and Sarathy’sframework also implies that the social structure of the nations has a role in pushing any business. In Japan people are well organized and they are concerned to the environment. That’s why nuclear reactor is welcomed by them.

Relevance of Maslow hierarchy pyramid
This hierarchy pyramid arranges the needs of the human being based on the elements. According to Jiang (2019), the bottom of the pyramid shows that physiological needs of the human beings refer to the basic needs. On the other hand the top level reflects that self actualization, which includes creativity and potentiality. When the company would penetrate in the Japanese market to offer its product it would focus on the top level of the pyramid as the company has to incorporate creativity in the products to compete in the hard market.

Fig: Maslow hierarchy pyramid
(Source: Uchejeso, 2019)

Standardization v adaptation
Standardization is synonymous of globalization. The organizations expand their supply chain in the global market place by assuming that the demand of all market segments is same (Liuet al., 2019). On the other hand adaptation is related to regional or local needs. Magnox’s penetration in the Japanese market is the process of adaptation. Nuclear reactor is prevalent in the Japanese market because it generates higher energy than the convenient sources. The power plants prefer this energy resource as the productivity is very high in this system. Due to this reason the target of the company is justified and the resources can also be extracted from the market.

Marketing mix and its rationale
As product, price, place, promotion are the primary elements of marketing mix. The product of Magnox in the new market segment is prevalent and the price, place and promotion are also justified in the Japanese market as they focus on this type of energy supply. 3 more Ps of the marketing mix are people, physical evidence and processes. In the Japanese market the company could have efficient workers who can use the latest technologies to shape the product and thus to manufacture more products within short period. One of the components of the marketing mix is process that has been adopted by the company focused in the recycling and eliminating radioactive waste. Magnox has adopted the current marketing mix or process to protect the environment.

CCA has great impact on the marketing mix of the country. Productivity can be fetched from the employees depending upon their cultural backgrounds. Magnox must allow collectivism in the new market segment to have a better performance graph. High masculinity index in Japan may differ from the though the UK organizations. But the positive side of the high index is that it is much more focused on the profit and expansion. Price of the products should be reasonable at the initial stage in order to combat the price war. The change that must be implemented in the marketing mix as per the demand of the nuclear reactor is to allocate proper place for establishing the power plant as the landform of the country is oversensitive by nature.

Section 3: Different market entry strategies and recommendations
Factors that influence market entry strategies
In the international market the cultural differences in the various regions and nations creates to undertake different strategies to penetrate the market. Thus market entry strategies are also influenced by numerous factors. Before entering the overseas market Magnox has to understand the current market scenario, the pushing and pulling factors of the market. In general market analysis is undertaken through the application of PESTLE analysis, SWOT analysis and Porter’s five forces. Through the PESTLE analysis, the organizations are able to understand the macro environment of the host country. The political, economical, social, technological, legal and environmental factors impact the function of the organization. According to Elezovic (2020), in case of Japan the analysis has revealed that the technical advancement of the country enables the organizations to communicate to the other branches without texting and by using wireless telecommunication system. Environmental factor of the country is very sensitive as the sea surrounded landmass is prone to tsunami and earthquakes. Thus the infrastructure of the organizations seeks to be more rigid. SWOT analysis is very effective in identifying the micro environment of the organizations. Before entering the Japanese market Magnox has to analyze the inner environment in order to verify the relevance of the business strategies. The analysis identifies the strengths, weakness, opportunity and threats of the organizations (Chamberset al., 2020). Magnox has simplified maintenance approach- which can be defined as one of its strengths. As Japan is advanced in technology and the people in the country is work alcoholic, it may created threat for the company. The employees may learn the mechanism of the nuclear reactor and thus developed system can be introduced in the market- which is a serious threat.

Porter’s five forces is another methodology to identify the loopholes in the market. Competition in the industry is very crucial to analysis. Threat can be generated by the new entrants also. Power of suppliers and power of customers are the major factor that affects the demand-supply chain. If the power of the suppliers and customers is higher than the power of the organization, then it curbs the way of profit. Substitutes are other major factors that also challenge the path of expansion.

Identifying the market entry strategies
The market entry strategies can be categorized in four groups based on the control and risk factor. As shown in the following figure, indirect exporting is under immense control and risk is very low. Direct exporting and cooperative strategies are subject to medium risk. Manufacturing is thee strategy that undertakes high risk. According to Karagöz (2020), indirect exporting is generally excludes foreign knowledge and marketing complexities. Direct exporting is effective for brand recognition. Distributors, agents, franchisees are engaged in this procedure to establish the image of the brand in the new market segment. But the drawback is lack of monitoring. The distributors or the franchisees could show ardent attitude in the market and thus affect the brand image. Cooperative strategies are moderate in undertaking risk. In case of the cooperative strategies the risk is distributed among the stakeholders. Manufacturing strategy is positioned at the top in the risk assessment. If the business policy is successful, then it fetches optimum outcome.

Fig: Different market entry strategies
(Source: Semanticscholar, 2009)

Various strategies (product, branding, communication, standardization vs adaptation)

In case of this product the product strategy that has been justified is SWAB (Sale what people actually buy). Irrelevant product in the market fails to produce positive response in the market. In this case keegan marketing strategy is very effective to identify the path of price reduction. Product strategy by Mesdag claims that the demand of the local or regional market is the top priority of selling the product (Dinget al., 2019).Branding strategy includes line extension, brand extension, new brand strategy and fight brand strategy. Magnox has adopted brand extension strategy to include the customers of international market into the demand supply chain.

Thus the company’s policy to sell nuclear reactor in Japan is justified. Pull strategy is the best method of communication strategy to reach the potential customers and stakeholders because by pulling the demand the company would be able to reserve a fixed place in the market. Standardization is appreciated byElezovic (2020), as the global business chain is enhanced and the product keeps rotating in the international market. But Liuet al. (2019), argued that standardization is not effective to meet the diversified demand of the customers. On the other hand,Zeitzen (2020)supported standardization because it targets the exact market segment to reach potential buyers.

Recommendation
As Magnox has planned for entering Japanese market, that’s why it is very important to invest the capital of the organization with minimal risk in order to avoid the possibility of failure. It is recommended to the company to opt for joint venture to stay at the medium position. The international business journey of the organization could not be encouraged with low profit level. But the target of high profit margin also concentrates on high risk.

Justification of the recommendation
Joint venture has been recommended to Magnox because this strategy simplifies the risk factor as more than one stakeholder participates in the business. As the company is also new entrant in the Japanese market, the knowledge and experience of other stakeholder to understand the market nature and demand trend. The pragmatic knowledge of the firm is the capital for future business expansion. Besides, the joint venture is also flexible by nature. Thus it is ease for the organization to absorb in the overseas market.

Conclusion
The above discussion has stated that the internationalization requires including some strategic steps in the business policy to expand the growth. Marketing strategy is implemented in the business depending upon the cultural practices in the new market segment. Magnox, the nuclear reactor company has planned for entering Japanese market to achieve optimum results as the country focuses on the clean energy resources. As the new market segment is the pool of cut throat competition. That’s why joint venture has been recommended to the company.

Reference
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