Introduction

Purpose

The paper focuses on Internationalisation expansion analysis of Citroen Company. The Citroen Company has planned to expand its USA or Philippines. The purpose of this paper is to determine which market area best would suit for expansion of the company. The paper aims to provide effective recommendation to solve the issues regarding target market, developing internationalisation strategy, and choosing most appropriate entry mode for the business expansion.

Company Background

The Citroen Company is a French Automotive Industry. The French Automobile manufacturer was founded in the year 1919. Andre- Gustave, a French industrialist was the founder of Citroen. Berliet and Maserati are the subsidiary of Citroen Company. The company manufactures pug in hybrid car and exports the products in the international market for high economic growth rate .The Company mainly designs, commercialises, and manufactures automobiles. Citroen’s headquarter is in Slough, England. The revenue generated by the company is $3.5k per employee. The competitors of Citroen is Renault and total employees are 13,900. Linda Jackson is the CEO of Citroen Company. The vision statement states to create vibrant society by realising the potentiality of mobility. The mission statement states to provide customers with new experiences and creative products for customers. The manufacturing output has increased to 1.1 percent and utility output has increased to 4.3 percent.

Q1.

International Competitiveness

Target market

The Citroen Company has determined the target market effectively so that the competitiveness can be easily measured. The senior citizens and professionals are the target market for the company (Fan et al., 2015). The professionals and senior citizen needs to acquire new technology at reasonable price and to have safe transport and to save fuel expenditure.

To understand the framework for international competitiveness and assumptions are described below for proper understanding.

Marketing theories

SWOT analysis

Strength	Weakness
The Citroen Company provides the customers with innovative models and provides tough competition with Renault. The company has chosen best strategies to expand its business in Philippine. The location advantage helps the company for higher profit aspects. The products of Citroen has continuous innovativeness and technological advancement leads to compete in international market. The company’s performance has tremendously increased in past years due to expansion in other countries. Developed markets has forced automobile manufacturers to target developing economies.	The bargaining power of customers has moved from demand to supply market in USA and other countries. This is the reason for which the company has decide to expand its business in Philippine.  Tough competition in the market has led the company to develop competitive strategy that can trigger the productivity of the business. As the choices or alternatives are more in the market for the customers, the Citroen Company have to develop more products.
Opportunity	Threat
The opportunity for Citroen Company in Philippine has high growth opportunity as the competitors are less in that market. The products are satisfactory in the Philippine market. The economy of scale is high in Philippine market as compared to USA.	The competitors may give tough competition to Citroen Company in Philippine market. The lack of innovation may lead to down fall of the market.

Limitations

• Limitation of the company is that the whether the company must own a subsidiary or must enhance their own business.
• The company is using static strategy that means they are not adopting innovation in their business.
• The company must focus on R&D that can trigger the profitability of the business. R&D can help the company to drive for competitive approach in the market and can help to develop key marketing strategies that may determine the changing market demands.
• As the company is not investing in new technologies, more competitors are acquiring the market with tough competition for Citroen Company (Fan et al., 2015). 

Assumptions

The assumption of the company is that the company has immense opportunity and efficiency to expand the business in USA and Philippine. The international expansion of business would result in high profit margin in future.

Part 2: 

Due to high competition in the market, the company determined the need for expansion in the business in two different market that is USA and Philippine. The application can be applied to the Citroen case for expansion by identifying the opportunities in both the areas and identify the level of profit for both.  

Part 3:

Porter’s Diamond of Competitive Advantage Analysis (Table 1)

	USA	Philippines
Factor Endowments	USA is abundant in different types of resources such as land, labour, and capital. But USA has a high number of non- tariff trade barriers.	Philippines have a high opportunity to expand the car business where profit aspects are high.
Demand Conditions	The cost for implementing the project in USA was high compared to Philippines. This is a factor for which cars arrive in USA after one or two years later than other market.	The cost for implementing the project is low as Philippine is a small auto industry. The competitors in Philippine are also less due to less customers as compared to USA.
Relating & Supporting Industries	IBM is the supporting industry who made a partnership with Citroen.	The supporting industries are the small independent firms. They assembles several parts and fabricate jeepneys.
Firm Strategy, Structure, & Rivalry	Domestic competition is high in USA that does not allow Citroen to the market	Domestic competition is low in Philippine. The Citroen has an effective strategy that has factors for increasing the profit of the business, competition is less.
Government Intervention	USA does not have better rules and regulations, as they are arbitrarily different.	Philippine government rules and regulations are different that
Chance	To protect domestic car manufacturers in order to make it easy for importers.	To introduce new technology and innovation in cars for more competitive approach.
Overall	USA will not be a good choice for expansion.	Philippine is the best option for expanding the business.

(Brander et al., 2015)

(Chuah et al., 2017)

Part 4:

Outline of the report

The company is a well- known Brand and planned to expand its business in USA or Philippine. The company develops the strategy and using models the company can critically determine and solve the issues. The outcome of the table is that Citroen Company would best expand their business in Philippine as it has low competition and the cost for the company will be low as compared to USA. The Company has high competition in USA, which lowers the value for Citroen in the market. The findings state that the marketing strategy considering 4 P’s shows that USA is not a good place for expanding the business. This is a factor for which cars arrive in USA after one or two years later than other market. This would be a major loss for the company, if the company will expand its business in USA.  

Q2 

PART 1:

International strategy

The company plans to expand its business in USA or Philippine to create value for the company by transferring core competencies to the foreign market where competitors are not so high.  The company has centralised product development functions that can record each process accurately and operate the functions at home. The manufacturing and different marketing functions are established in the local country (Nasehi et al., 2017). The head office has tight control over the company. The international strategy provides the selling product that has a universal need. The company limits its customised product offerings and market. The international strategy is developed to determine the market for expansion where there is low pressure regarding customer responsiveness and lowers the cost of the company.

Cost Reduction or Differentiation

• Bowman’s strategic clock

Citroen cars is positioned as a popular brand across the country. Still the Citroen cars need to position the product in such a way that, the product is at reasonable price and deliver highest value to the customers. Citroen cars are more profitable in the Philippine region, because Philippine can deliver more cars in the smaller region. Hence, if we considered the cost and differentiation, cars will be less profitable in USA.

Local Responsiveness Pressures: 1-5 scales

• – Differences in Consumers tastes and preferences: USA have more ability to choose the quality products and choose something better than the previous products. Hence, the difference in consumer’s tastes and preference is more in USA than Philippine.
• Differences in Infrastructure & Traditional Practices: The pressure for local responsiveness is more in Philippine than USA. Therefore, the differences in infrastructure & traditional practices is more in Philippine than in USA.
• Differences in Distribution Channels: The manufacturer of USA, sells the product to the retailer and the retailer sells the product to the consumer. Therefore, it is a two level channel. Whereas in Philippine, the manufacturer uses one-level channel to sell the product. The manufacturer deliver the product directly to the consumer. Therefore, one-way channel generally donot provide any feedback. But, two-way channel involves feedback from the customer. Therefore, Distribution channel in USA is better than Philippine.
• Host-Government Demands: The government intervention in USA is more than Philippine. This may impact the manufacturing business of USA as compared to Philippine. Hence, Citroen cars will be less demanded by government in Philippine country.

Cost Reduction Pressures: 1-5 scales

• Competitive Global Market: The competing companies for car production is more in USA, than the Philippine. Hence, competitive global market in USA is more for Citroen car.
• Production of Commodity-Type Products (ex. Coconut oil, Vegetables, Fruits etc.): Production of commodity type product in USA is more than Philippines. This is because the distortion for agricultural incentives is more in Philippines than in USA.
• Competitors in Low-Cost Location: Competitors in low cost location is found more in Philippines than in USA. This is because, Philippine country is emerged as the lowest cost labour cost location. USA is found to be at an average of 12% of lowest labor cost, whereas, Philippine is found to be at an average of 13% in terms of lower labor cost.
• Presence of Persistent Excess Capacity: The demand for Citroen car is less in USA than Philippines. This is because of severe financial crisis in the USA economy. Hence, the presence of persistent excess capacity is more in USA, than in Philippine (Luther et al., 2016).
• Powerful Consumers that Face Low Switching Costs: The competitive advantage of Philippine is more than USA. Therefore, customers of Philippine company can easily attract the customers in their product as compared to USA. The Philippine company can also raise their prices without worrying the alternatives.

Characteristics scaled will determine the category dimensions strategy

Potential issues and problems that will be created when using the strategy

There are various issues that may impact the dimensions strategy. There may be strategic issue in doing the decision-making. The top management should ensure decision-making that will deliver value to the consumers. Irrelevant decision-making by the management will cause problem in executing the strategy. Another problem may arise is the irrelevant data transformation in organisational levels.

• If dimension is somewhere in between 2 dimensions, make justified decision on which strategy to adopt

The organisation can use marketing mix strategy in order to set the market objectives in the target market of Philippine (Abdel et al., 2018). Philippine can deliver greater value for Citroen cars because, the product competition is less in the country. The product can be sell at lower price to the consumers (Stan, 2015). The organisation can easily attract the Philippine consumers through product promotion.

	Scale (1-10)
Pressure for Cost Reductions	USA	Philippine
Competitive Global Market	8	6
Production of Commodity-Type Products (ex. Coconut oil, Vegetables, Fruits etc.)	8	7
Competitors in Low-Cost Location	6	8
Presence of Persistent Excess Capacity	8	5
Powerful Consumers that Face Low Switching Costs	6	8
Total:	36	34
Average:	6	5.66

	Scale (1-10)
Pressure for Local Responsiveness	USA	Philippines
Differences in Consumer Taste & Preferences	8	6
Differences in Infrastructure & Traditional Practices	5	8
Differences in Distribution Channels	7	6
Host-Government Demands	8	6
Total:	28	26
Average:	7	6.5

Advantages: The product can sustain in the Philippine economy. There is less competition in the market.

Problem: There may be problem in management decision-making.

Marketing theories

4 P marketing mix

Product- the Citroen Company have product line which attracts more customers towards the market.

Place- The Philippine is the best place for expansion where the cost for the company is low.

Price- The price varies for different models as the customers have high demand for the product.

Promotion- the promotional ads for Citroen is highly effective in Philippine market as the customers have limited products in that market.

Q3 

PART 2:

Entry mode

The entry mode must determine the below objectives-

• The entry mode determines the types of decisions Citroen Company faces while contemplating internationalisation (Fan at al., 2015). 
• The company have different entry modes to internationalise. It is important for the company to determine the advantage and disadvantages of the company before expanding its business.
• The core competency of the company and the level of pressure for the cost reduction are the factors that impacts the entry mode of the company in the market.

Initially, the company determines which foreign market is best for expansion, USA or Philippine. As USA is the larger automobile industry compared to Philippine, but the French have the wrong cars in US market. So it would be the best option for expanding the business in Philippine. To determine when is important to enter a market, as it can increase the sale of the products at that point of time. During festive seasons, Philippine may trigger the sales rate high as compared to other seasons of sale. The offerings mainly attracts the customers to buy the particular product. The scale of business must be measured based on the market demands.

The long run profit is observed in Philippine compared to USA. As USA develops some of the parts of the car and other manufacturer are also involved for increasing the production line. The US has a high number of non-tariff trade barriers due to which cars are exported to Philippine.

Dunnings Eclectic Model:

Source:Dunning (1981)	Categories of advantages
Ownership advantages	Internationalization advantages	Locational advantages
USA	Philippine	USA	Philippine	USA	Philippine
Form of market entry	licensing	No	Yes	No	Yes	No	Yes
export	No	Yes	No	Yes	No	Yes
FDI	No	Yes	No	Yes	No	Yes

• Ownership advantages
  • Core competencies- the Philippine has the core competency in expanding the business. Ownership advantage including the proprietary information and can also get the ownership rights from Citroen. Philippine have highly efficient skills that can help in managing the business in that area. The ownership advantages are typically considered to be intangible. They include that which gives a competitive advantage, such as a reputation for reliability.
• Location advantages
  • Production, market- the Citroen Company has location advantage as in Philippine the environment management system has helped the company to effectively expand the business. The automotive industry in Philippine mainly focuses on casting, assembling the body parts, water consumption management and many more.
• Internalisation advantages
  • Efficiencies- the efficiency of the company is high to expand the business in Philippine.
  • Will it affect value chain- No it will not affect value chain.

	FDI Entry Modes	Non-FDI Entry Modes
Advantages	It helps to increase the economy of a country.	It provides a barrier to expand the business internationally.
Disadvantages	It may face legal problems as every country has different rules and regulation to export and import business.	The rules and regulations of the country may not change for years, and may not be updated as the country is not participating in international marketing.
Availability	The scope for increasing the productivity of the business will be high if the company expands its business in Philippine.	The scope for selling the products with limited resources can help to save the resources for future.

Conclusion

The report concludes that the Citroen Company has effective strategy, and models that helps the business to understand which best suits for expansion. It is determined that Philippine will provide high growth opportunity for the business. The low cost to the company by selecting Philippine as the market place helps in positive improvement in business.   

References

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