History of Green Technology
The automotive sector has been in the world for over a century, which has continuously tried to develop the vehicles based on new technologies, which will power the cars such as the internal combustion mechanism. It has also led to the use of hybrid fuel cells, which uses hydrogen as its base. Since the 1900s, the use of vehicles that are powered by electricity has faced many legitimate activities with respect to the design of the vehicle and the use of gasoline as power. The improvements in the performance of the cars are being demanded in the market and the supply of the vehicles has created a new map with respect to electric vehicles (Piercy, 2014).
The Electric Vehicles (EVs) and Hybrid Electric Vehicles (HEVs) are powered by electronic motors that come along with packs of rechargeable batteries helps in converting almost 75 percent of the chemical energy that helps the car to run on batteries. The combustion engines that are internally present are low on efficiency of energy and can only convert 20 percent of the energy that is stored in gasoline. Since these vehicles do not pollute the atmosphere and the plant that manufactures the electricity is also less polluting in nature, so it is preferred over the gasoline vehicles in some countries sue to the high rate of pollution (Kolodziej, 2014).
Green Technology is a long-term effect that takes place in the environment due to the new inventions that is taking place to keep the planet safe. It is done through efficient use of energy and recycling the renewable resources, which will provide health and safety to the people along with the innovations that are environmental friendly in nature. There is a huge problem with the CO2 emission that is happening in the world in the present period. The Boston Consulting Group has reported that there is a correlation between the emissions of CO2 and global warming, which has to be accepted by the community and the damage that is being caused by global warming, which has caused a huge awareness among the people (Peck et al., 2013).
It is seen that France has accounted for more than 9400 units of these vehicles that were sold presently, which is an increase of 2.9 percent than in 2008. It is seen that in 2013 the majority of the shares in the market were held by Renault Zoe and Renault Kangoo ZE had a share of around 28 percent followed by Nissan Leaf, which had a minimal share of 10 percent in the French market. The other companies that were present in the market are Bollore Bluecar, Goupil G3 and Renault Twizy, which was produced by the French companies in France (East et al., 2016).
French Hybrid/ Electric Manufacturers
The main motive of the company is to make profits, which cannot be dependent on only one factor. It is the combination of various factors that accounts for the maximization of profits for the company. the launch of the electric car by the French in the Russian market is a strategy that has been derived from the proactive and reactive motives, which could make the car company advantageous and the product a success in the foreign market.
These motives are an attempt that helps in change in the strategies, which is based on the interest of the firm and the possibilities that are present in the market. There are several proactive methods that will help in the initial stages of launch of the car in the Russian market.
Growth goals and Profit- The car company needs to plan out how to earn from the opportunities that are present in the new market by generating better sales, which will increase the level of competitiveness on an international and on a national scale. It is seen that the top vehicles with respect to EV vehicles are manufactured by the French companies, which makes them competitive in nature.
Technological competence- The French company may get an advantage from the competence that they have in technology along with the knowledge of the French engineers who has experience in this field. The presence of several manufacturers in France will increase the level of technology at the national level, which will help them in developing the products that are unique in performance, which will be liked by the Russian customers. Additionally, the car companies will be benefitted from the diversification that is present in the market, which will increase its market share at an international level. The launch of EV and HEV products in the Russian market will help in improving the image of the company on a global scale (Dvir & Strasser, 2017).
Opportunities in the foreign market- The French car company needs to understand that there are huge opportunities in Russia, as the customers in the market likes cars. From the economic and the environmental perspective, there are huge opportunity with respect to hybrid cars, as the consumers are concerned about the environment. The market has a promising growth rate and the sale of these cars will increase in the future with more consumers becoming conscious about the environment with every passing day.
Economies of scale- The French companies have been successful in m many countries in Europe due to the positioning strategy adopted by the French companies. This has given rise to the economies of scale as most of the supply chain networks in the country is developed.
Motives of Internationalization
Tax benefits- The Russian market has eased the tax credit to increase the purchase of these cars and has decreased the oil imports, which has directly resulted in an increase in sales of these cars. The French company will be involved from an advantageous point of view for the shelters with respect to tax in the Russian market (Laperche & Picard, 2013).
These motives help the company to react to pressures that they face in the foreign or in the home markets and adjusts them by changing the strategies over a time period.
Competitive pressure- The opportunity in the market with respect to electric and hybrid cars has been adopted by Toyota, which can be a competitive pressure for the French company that they have to respond to. The market is highly developed and it can be seen that car plays an integral part in the life of the people because of the easy access of the driver license.
Domestic market- The French car company may have to export their product due to a potential market that is present in their home country for the future. The domestic market is not always able to sustain the economies of scale, which forces the companies to automatically shift to export markets, as a strategy to penetrate a new market (Groucutt & Hopkins, 2015).
One of the barriers that the French company with the launch of the product in the Russian market is the language problem, as the dialect is different for both the countries. The company needs to adjust to the behavior of the consumers in the Russian market so that they can influence them in buying the product. The beliefs and the practices of the humans will also help the company to socialize in the market. These elements will differ in different markets and has to be customized in a proper manner so that the company can adapt to the behaviors that are present in the foreign market (Majaro, 2013).
Macro level
The macro level with respect to competition can be explained with the diamond model of Porter. It consists of:
Factor conditions- The main resources that the company possesses is the innovative culture that will put the company in a position within the country with respect to the products that have various methods of performance, efficiency and function. This can be explained with the help of an example such as Renault, which has its headquarters in Paris who makes the important decisions and the outsourcing and assembling is done in the European countries so that it can keep a check on the quality of the products.
Proactive motive
Demand conditions- The Renault is considered to be one of the best-selling vehicles in the electric car category in Europe in the year 2013. This has created a huge demand for the product in the market worldwide. The competition will be high in the foreign market, as there will be other companies that will be competing but due to its image on a global scale the demand of the product will be high in the Russian market. it was seen that the demand also increased due to the shift of the customers to environment friendly options to protect the earth (Prieto & Caemmerer, 2013).
Supporting industries- There were many ancillary industries that became suppliers to the car manufacturers and provided technologies for innovation and internalization on a constant level. This helped the R&D department of the companies to produce the products in a more cost-effective way. The integration happened on a horizontal as well as on the vertical basis. It led to a growth of suppliers as a network of suppliers in the French market.
Strategy, structure and rivalry of firm- There is a high level of domestic competition between Renault and Peugeot, as they are the two main companies in the French market. there are other Asian companies that are present in the market that offer lower prices but the competition on the domestic level is important as it helps in bringing out the level of productivity and efficiency between the car companies (Groucutt & Hopkins, 2015).
The meso level of analysis will be done based on the Five Force Model framework of Porter, which consists of :
Competitive Rivalry- The level of competition that is forced by the rivals is low because many companies are still on the verge of making EVs. The barriers of entry is high as the car companies have access to the same technology so that they can manufacture the hybrid cars. The main difference with respect to these cars are the design of the batteries and the electric engines. The other challenge is that the batteries need to hold the charge so that they can be recharged at a faster rate. It is therefore important to have an engine that will have a high rate of performance and the use of power can increase.
Buyer power- The bargaining power of the customers are low even when they are the ones who will be purchasing the products because the hybrid car industry is progressing at an increasing rate. The bargaining power of the customers is the primary threat that is present in the car market, which creates a highly competitive market, as the expectation of the customers are high related to the use of technology. The customers have a strong power in bargaining with respect to the used-car market as its rate is increasing and the customers are more concerned with their budgets (Rani, 2014).
Reactive motives
Supplier power- The bargaining power with respect to the suppliers is average as the car company maintains a long-term relation with the suppliers because they buy the products in bulk. This scene will change when the suppliers will be able to provide better technological equipment and meet the orders of the company in time related to delivery of the raw materials.
Threat of entry
The electric car industry is a complement for the power and the oil industry. The power industry is showing great concerns in the electric car industry as it will help them in gaining more success, which will help them in selling more power. The oil industry on the contrary, does not have any interest in this vehicle as it will reduce their income. The threat of new entrant s with the similar technologies in the market is low. The new entrants that comes with disruptive technologies have high power such as BMW, Mercedes and Porsche. There is also a challenge that the hybrid industry is facing is with respect to the non-renewable fossil fuels such as natural gas and hydrogen (Baines, Fill & Page, 2013).
Threat of substitutes
It is seen that most of the customers prefer normal car, which makes the car industry very competitive. The substitute products are competitive in nature, which has made the industry less attractive in nature. The companies that are present in this industry has to pay attention on the competitive nature on a constant manner because it tends to change over a period of time (Rani, 2014).
Supplier- the French car company has relations with the suppliers in all over Europe so that the inputs can be provided, which will help in innovation and internalization. Additionally, the company has a network of distributors who support them by providing the materials on time so that the completion of the manufacturing process can be done on time.
R&D- This department enables the company to produce the product in a cost-effective manner. The department helps in constantly upgrading the technologies so that the manufacturing process can continue in an efficient manner.
Sales and marketing- The French car company has an effective marketing team and spends a minimum budget on advertising and promoting the brand in the market. The sales of the cars are done on own dealership, which helps in creating maximum impact on the market (Bang, Joshi & Singh, 2016).
Political barriers
Several political barriers may hinder the sale of French car in the Russian market. The restriction of government is given so as to put a regulation on the tariffs and to take care of the entire population that is present in the country. The government needs to place some rules so that the export to the other countries can help in mitigating the risks. The French company needs to realize whether or not the car will be built in the French market or for the Russian market and make improvement s in it accordingly. The Russian government has full control on the products that are coming in the country to be sold in the local market (Babin & Zikmund, 2015).
The primary economic barrier for the French company to sell its product in the Russian market will be with respect to the currency. The difference in the denominations of the currency will make it difficult for the company to maintain their accounts, which could lead to cost of production being higher that the cost of goods sold. Apart from this barrier, the French company may not have entire knowledge about the distribution network that is present in Russia. The economic barriers also contain the trade barriers where the company needs to identify its competitor in Russia and make superior quality products so that the customers are interested in purchasing those products (Rostomyan, 2014).
Hofstede’s Model
Power distance- There is a certain form of inequality that exists between the French and the Russian because of the cultural difference and the principles.
Uncertainty Avoidance- The uncertainty level is very high in France, as people tend to disagree with the companies whereas in Russia the people are more comfortable in talking with the companies and negotiating their offers.
Individualism- This culture is present in Russia whereas the people of France live in a community and is inclined towards living in groups. The French people favors to live in groups while the Russians consider social status as their pride.
Masculinity- It is present in the Russian market, as the people associate themselves with success, cars and the social status. In France however, people who talk about their income are considered to be rude because the role of women is increasing in business (Jamal, 2014).
Communication context- The French culture is very strong with respect to culture whereas the Russians have a low context of culture. This has led to cultural clashes between the two countries where money, business, beliefs and values act as methods of cultural differences.
Customer-oriented culture- Customer Relationship Management (CRM) helps in developing the customer loyalty and the services of the customers are improved. Personal selling is more impersonal in France, as the sellers get the required information from the customers only if they need it. The Russians on the other hand tries to maintain customer relations in a proper manner, as they consider that the customers may come back for the same product again to their store (Wirtz, 2016).
Export mode- This will help the company to manufacture the products in their home market and export it to Russia, which acts as a common mode of entry. Exporting helps to enter the market initially and revolves around the operations that are based on the foreign country.
Contract manufacturing- This will enable the car company to have foreign production, which does not need any final commitment from the company. It will help in developing the policies that are based on long-term in the foreign market.
Licensing- This will help the company if they look for any manufacturer in Russia and license their products to be manufactured for a certain sum of money. This will promote the production in the local market with a minimum investment of capital (Babin & Zikmund, 2015).
International Product Life Cycle (IPLC)
IPLC can be summarized as a diffusion of innovation, which takes place between national boundaries. It helps in growing of demand in the country that has innovated it after which it is exported. This helps in growing the demand in the Low Developing Countries where the opportunities are vast.
From the point of view of macro economical approach, it can be seen that the innovating country has the highest demand of the product, which helps in excess production that can be exported to other countries when the demand of that place grows. Following this, the demand increases in less developed countries. The product will reach its maturity in the market that are highly industrialized after which it is available in the lesser developed countries (Rostomyan, 2014).
The time span of the products in the foreign market has to go through all the stages that changes in various markets. This is due to the economic levels that are different in other countries. The main elements in PLC are the demand structure of the product, the manufacturing and marketing strategy along with the strategy that the company will adopt to market the innovated product (Wirtz, 2016).
Thus, it can be recommended that the French company have to keep all its doors open and choose the best mode of entry, which will help them in establishing themselves in the foreign market.
Conclusion
Therefore, it can be concluded that the federal government of Russia has to give incentives to the investors so that they can adopt the green technology that is present with respect to electric cars. Since the French car company is responsible for protecting the environment, there will b e huge demand for the supply of vehicles at the local and international level.
References
Babin, B. J., & Zikmund, W. G. (2015). Exploring marketing research. Cengage Learning.
Baines, P., Fill, C., & Page, K. (2013). Essentials of marketing. Oxford University Press.
Bang, V. V., Joshi, S. L., & Singh, M. C. (2016). Marketing strategy in emerging markets: a conceptual framework. Journal of Strategic Marketing, 24(2), 104-117.
Dvir, E., & Strasser, G. (2017). Does marketing widen borders? Cross-country price dispersion in the European car market.
East, R., Singh, J., Wright, M., & Vanhuele, M. (2016). Consumer behaviour: applications in marketing. Sage.
Groucutt, J., & Hopkins, C. (2015). Marketing. Palgrave Macmillan.
Jamal, Z. B. (2014, October). Cross-cultural impact on marketing strategies: A study on automobile industry. In International Conference on Business, Law and Corporate Social Responsibility.
Kolodziej, E. A. (2014). Making and marketing arms: the French experience and its implications for the international system. Princeton University Press.
Laperche, B., & Picard, F. (2013). Environmental constraints, Product-Service Systems development and impacts on innovation management: learning from manufacturing firms in the French context. Journal of Cleaner Production, 53, 118-128.
Majaro, S. (2013). International Marketing (RLE International Business): A Strategic Approach to World Markets. Routledge.
Peck, H., Christopher, M., Clark, M., & Payne, A. (2013). Relationship marketing. Taylor & Francis.
Piercy, N. (2014). Export Strategy: Markets and Competition (RLE Marketing). Routledge.
Prieto, M., & Caemmerer, B. (2013). An exploration of factors influencing car purchasing decisions. International Journal of Retail & Distribution Management, 41(10), 738-764.
Rani, P. (2014). Factors influencing consumer behaviour. International Journal of Current Research and Academic Review, 2(9), 52-61.
Rostomyan, A. (2014). The Impact of Emotions in Marketing Strategy. In Internationale Trends in der Markenkommunikation (pp. 119-129). Springer Fachmedien Wiesbaden.
Wirtz, J. (2016). Winning in Service Markets: Success through People, Technology and Strategy. World Scientific.
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