An International Marketing Plan

for
The Launch of a Hybrid Car by a French
Auto Manufacturer in the United State Market

By Apollo kusta

2017

Table of Contents
1. Introduction ........................................................................................................................... 1
2. Historical Background of Green Technology ..................................................................... 4
3. The Global Development of Electric / Hybrid Car Manufacturer ................................... 5
3.1 Global marketing and sales situation of Electric/Hybrid cars ............................................ 6
3.2 French Electric / Hybrid Car Manufacturers ...................................................................... 7
4. Motives and Ways of Internationalization .......................................................................... 9
4.1 Pro-active Motives ............................................................................................................... 9
4.2 Reactive Motives ................................................................................................................ 11
4.3 Critical barriers ................................................................................................................. 13
5. Company's International Competitiveness ....................................................................... 14
5.1 Macro level ........................................................................................................................ 14
5.2 Meso level analysis ............................................................................................................ 16
5.3 Micro level ......................................................................................................................... 21
6. Political and Economic Barriers to export of electric/hybrid cars to the U.S. .............. 24
6.1 Political Barriers ............................................................................................................... 24
6.2 Economic Barriers ............................................................................................................. 25
7. The Influence of Culture on the International Marketing Strategy ............................... 26
7.1 Hofstede's Model ................................................................................................................ 27
7.2 Edward Hall ....................................................................................................................... 28
8. The type of market entry modes that the French car manufacturer should consider .. 29
9. International Product Life-Cycle and its implications for the electric /hybrid car....... 35
9.1 International Product Life Cycle (IPLC) ........................................................................... 35
9.2 PLC Implications for the Electric/Hybrid Car Models...................................................... 43
10. Conclusions and Recommendations ............................................................................... 45
10.1 Conclusions ........................................................................................................................ 45
10.2 Recommendations .............................................................................................................. 48
Reference ..................................................................................................................................... 50
Annex-I..........................................................................................................................................54
Annex-II.........................................................................................................................................55
Annex-III........................................................................................................................................56
AnnexIV........................................................................................................................................ 57

1. Introduction

The automotive industry has been around for over a century and has developed vehicles that use

different technologies to power their cars that includes steamers, electrics, internal combustion

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(e.g. diesel, rotaries, and turbines), fuel-cell hybrids, pure electrics, and hydrogen fuel-cell

(McGrath R. N., 2012). "Since the early 1900s, electric-powered vehicles have stayed in an

uncertain state at the fringe of legitimacy when compared with the dominant vehicle design of

gasoline power. Due to urban air pollution, the California Air Resources Board (CARB) mandated

two percents of the cars that manufacturers sell in California must be electric vehicles starting in

1998" (Christensen, The innovator’s dilemma: When new technologies cause great firms to fail ,

1997, p. 159). Performance improvements demanded by the market, and the performance

improvements supplied by the technology will create the trajectory map for electric vehicles.

Electric Vehicles (EVs) and Hybrid Electric Vehicles (HEVs) are driven forward by an electric

motors powered by rechargeable battery packs. Electric motors can convert 75 percent of the

chemical energy from the batteries to power the wheels. The internal combustion engines (ICEs)

are less energy efficient as it can only convert 20 percent of the energy stored in gasoline (Dolcera

(website). Electric Vehicles Market., n.d.).

Electric Vehicles emit no exhaust pollutants and the power plant producing the electricity is less

pollution than gasoline vehicles. The performance benefits of electric motors provide quiet,

smooth driving, and quick acceleration than ICEs.

Due to advocacies of clean and unpolluted world environment by money interested groups and

political parties one of the pollutants like CO2 emission has been criticized all over the world. One

of the most pollutant industries is the transportation sector. Karamitsios (2013, p.6) holds that "the

transportation sector has contributed significantly to the increase of CO2 emissions worldwide".

This is due to heavy reliance of the sector on fossil fuel technologies (Karamitsios A. , 2013).

In order to expand the use of non pollutant alternative vehicles many governments like the U.S.

federal government has established various incentives and regulations that urge new entrepreneurs

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and corporate entrepreneurs to invest in the green-technology vehicle market. (Karamitsios A. ,

2013). Emanating from the governmental regulations and incentive programs on environmental

pollution, different manufacturers started to come up with the launching of environmentally

friendly technologies such as Electric Vehicles (EVs) and Hybrid Electric Vehicles (HEVs). This

change in product development enables providing innovative cars with an added value of gas

consumption efficiency and other environmental friendly aspects.

In addition to this the car market is strongly developed internationally for the production as well

as for the marketing and selling process. According to Peter (2012) "In today's competitive

environment, developing an international marketing strategy is common and used by many

companies to open business perspective, remain competitive and fulfill customer needs across the

globe. However, implementing an international marketing strategy is a long and expensive process,

especially in a competitive market such as the car market of the United States. As per the US

Bureau of Transit Statistics (2004), the number of registered passenger vehicles in the US is

243,023,485" (p. 1). The environmental policy and the measures to promote the energy transition

encourage the purchase and sale of electric vehicles.

According to Catero and Ghauri (as cited in Peter, 2012, p. 1), "International Marketing is the flow

of a company's good to consumers in more than one nation with the objective of profit.

International marketing allows enlarging the company's target and increase the number of potential

customers and probable sales. Nevertheless, international marketing can be source of success or

failure if wrongly managed or implemented".

The same author asserted that " all products cannot be marketed on an international level, the

potential demand has to be effective, the product has to provide an added value for the customer

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and be well marketed according to cultural, economical and many other factors" (Peter, 2012, p.

1).

This paper is about international marketing plan for the launch of an electric / hybrid Vehicles by

a French auto manufacturer in the US market. In this paper we will discuss about historical

background of green technology, and the global development of Electric / Hybrid car

manufacturer.

This paper will addresses more specifically the reactive and proactive motives for exporting

electric / hybrid vehicles, examine the company’s international competitiveness at the macro, meso

and micro levels, the possible economic and political barriers that would impact the export of cars

to the United States. The paper also covers the influence of culture on the international marketing

strategy and the type of market entry modes that the French car manufacturer should consider. In

addition it describes the International Product Lifecycle (IPLC) and its implications for the electric

/hybrid car models.

2. Historical Background of Green Technology

According to Bellis (2014) green technology is the long as well as short term impact of new

inventions on the environment. This technology has the purpose of making our planet green. The

same author pointed out that energy efficiency, recycling concerns for safety and health and

renewable resources, among others are what environmentally friendly innovations in energy

technology is all about.

"The CO2 emission has become a bigger and bigger problem around the world today. It’s hard to

open a newspaper without reading about the polar ice is melting or that it’s getting warmer"

(Lehman, 2009, p. 6). According to the Boston Consulting Group "the causal correlation between

CO2 emissions and global warming is now widely accepted by a solid majority of the scientific

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community. The significant damage caused by global warming and the intense public awareness

of this topic make the challenge of reducing CO2 emissions the major force currently driving

development of alternative concepts for automotive propulsion" (Boston Consulting Group, as

cited in Philipp & Haiss, 2010, p. 9).

An important incentive for new technologies was stipulated in 2007 by U.S. government by

enacting the Energy Independence and Security Act, formulated by the Congress, which forced

the automobile manufacturers to achieve a limit of 35 mpg by 2020 (Karamitsios A. , 2013).

The same author identified that, various programs that provide financial back-ups to car consumers

have also been devised by the U.S. government.

These incentives involve:

 Loans for the promotion of battery research and other green-technology development for

vehicles.

 Support for electric vehicle (EV) battery charging station implementation.

 The EV purchasing by the federal government (pp. 22-23).

3. The Global Development of Electric / Hybrid Car Manufacturer

Car manufacturers have to deal with increasingly stringent norms and customers who are

increasingly demanding with respect to fuel savings. As a result, large numbers of them are now

looking into solutions that involve electrifying their vehicles. But not all manufacturers are

necessarily using the same strategies (The development of hybrid and electric vehicles, 2011).

The market for hybrid and electric vehicles is still largely dependent on these premiums for helping

it to grow and reach a critical size. Manufacturers and other bodies involved in the sector are well

aware of this and are striving to take advantage of these tax shelters. Although the market is very

dependent on these premiums, and despite all the risks that such dependence brings, the majority

5
of manufacturers are counting on hybridizing their range - a practice that was initiated by Toyota.

At the same time, most manufacturers are making progress on their electric vehicle projects (The

development of hybrid and electric vehicles, 2011).

Beyond simply being a "race" to launch the first mass produced electric vehicle for the general

public, two main approach strategies for electrifying vehicles are emerging quite clearly. The

strategy favored by most manufacturers involves gradually hybridizing their range, with the

electric vehicle at the very end of the chain, as Toyota is doing. Renault, on the other hand, has

turned the electric vehicle into an area for strategic development and is already planning to release

four different electric models for the 2011- 2012 period (The development of hybrid and electric

vehicles, 2011).

3.1 Global marketing and sales situation of Electric/Hybrid cars

The demand of global market is growing sharply over two times from 45,000 units in 2011 to

113,000 units in 2012 as indicated in Annex-I. The market share of hybrid and pure electric car

volume in 2009 and 2020 projective volume are still very small percentage in vehicles industry as

shown in Annex-II.

As explained by the France Diplomatie (n.d.) "Europe has become the second largest market for

electric vehicles behind the United States and ahead of Japan. 18,939 electric vehicles were

registered in Europe during the first half of 2013 (compared with 15,503 during the first half of

2012), while the United States registered almost 30,000 electric cars and Japan less than 6,000"

(para. 7).

When we see the top electrified vehicles sales in the world " the Nissan Leaf dominated sales

globally and #1 in 2013. The Chevy Volt, especially thanks to strong sales in the US, was #2. The

Toyota Prius Plug-in inched out the Tesla Model for #3. And not too far behind the Model S was

6
#4 and the Mitsubishi Outlander Plug-in is#5. After that, sales drop off quite a bit and Renault Zoe

ranked as #6 globally" (Shahan, abb-conversations, 2014, para. 1).

The same author further ranked the top electrified vehicles sales in Europe as a whole, "the Nissan

Leaf again took #1 in 2013. However, in this region, #2 was the Renault Zoe. The Mitsubishi

Outlander Plug-in wasn’t far behind at #3, followed by the Volvo V60 Plug-in and then the Renault

Kangoo ZE. But the results in specific European countries varied quite a bit" (Shahan, abb-

conversations, 2014, para. 2).

3.2 French Electric / Hybrid Car Manufacturers

France accounted for sales of 9,399 of hybrid electric vehicle units – a very modest increase of

2.9% on 2008, but importantly, on a market share that fell.

According to Shahan (2014) in 2013 the Renault Zoe captured 37% of the market, the Renault

Kangoo ZE (an electric van) got another 28% and the Nissan Leaf took third place with 10%

electric vehicles market share in France. The rest three EV manufacturers Bolloré Bluecar, Renault

Twizy and Goupil G3 took the 4th, 5th and 6th place respectively. Five out of these top six models

were vehicles produced in France by French companies.

As it has been explained in the above section, one of the major green technology vehicle markets

is the introduction of Electric Vehicle (EV). According to the information of France Diplomatie

"The implementation of an environmentally responsible public policy at the national and local

level and the supply of vehicles produced by French manufacturers have enabled France to become

the largest electric vehicle market in Europe" (France Diplomatie, n.d.). Among the Electric

Vehicle manufacturers in French, Renault has played a pioneering role to achieve this top ranking.

To look at the industrial environment of Electric and hybrid cars in France, the list of

manufacturers are concisely summarized by Shahan (2014) as follow:-

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Table 1: List of electric and hybrid car manufacturers in French
No. Description Performance, number of
Seats and price in Euro
1 Renault Zoe is a good-looking, 100%-electric, super-affordable  Travels 210 (130 miles)
car. It’s about the same price in France, its home country, as the kilometers per single
Nissan Leaf is in the US, and just a little more than the base Leaf charging
costs in France (€18,090).  Have 5 seats
 Its price is €20,900
The Zoe was the 2nd-best-selling electric car in Europe in 2013  Available in Europe
next to Nissan Leaf. It is also the first best-selling car in France.
Despite only being available in Europe, it was the 6th-best-selling
electric car in the world in 2013 — the highest-ranking car to be
available on only one continent.

Renault is the French leader of the car industry in France, with a

turnover of €38 billion and more than 3 million car sold in 2010 ,
the company recently launched a new range of electric cars in
France
2 The Renault Kangoo ZE, the Renault’s electric van, is doing  Travels 170 kilometers
quite well. It was the 5th-best-selling plug-in in Europe in 2013, (110 miles)
and the 10th-best in the world. Furthermore, in its home country  2-seat or 5-seat options
of France it is the second best-selling car, the Kangoo ZE versions.
represented about 12% of all Kangoo light commercial vehicles  Price is €20,450.
sales.  Available in Europe

3 The Renault Twizy is a cute and fun little two-seater that comes  Travels 80 km (50 miles)
in at a super affordable price. With just two seats, it’s clearly not a  Have 2 seats
“family car,” but it is a ton of fun to drive and very adequate for  Price is €7,240
most driving needs. Because of its small size, the Twizy was the  Europe (& reportedly US
10th-best-selling electric car in Europe and 15th-best-selling on eBay)
electric car in the world in 2013. It is also the 5th best selling in
France in the same year.

4 The Citröen C-Zero is produced in France but it was developed  Travels 150 kilometers (93
in collaboration with Mitsubishi Motors Corporation and shares miles
the model with the Peugeot iOn. It is the 16th best-selling car in  Have 4 seats
Europe and 12th best selling in France in 2013.  Price is €29,600
 Available in Europe
5 The Bolloré Bluecar is a low-price, simple electric car produced  Travels
and only available in France. It is used in the Autolib’ car  250kilometers(155 miles)
sharing program in Paris, but is also available to retail customers. 4 seats
It was the 16th-best-selling electric car in Europe in 2013.  €12,000 + €80/mo battery
 Available in France

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No. Description Performance, number of
Seats and price in Euro
6 Peugeot iOn is essentially the same as the Citröen C-Zero and  150 kilometers (93 miles)
Mitsubishi i. The Peugeot iOn was the 17th-best-selling electric 4 seats
car in Europe in 2013 and 11th in France.  €29,600
 Available in Europe
7 The Goupil G3 is a 100%-electric utility vehicle designed for  120km (73 miles)
services like garbage disposal, construction site support, leaf  Price is €17,000
collection, park maintenance, etc. It is produced and primarily sold  Available in Europe
in France. The Goupil G3 came in #18 in European EV sales and
the 6th in France in 2013.
8 The Mia Electric Mia is built in France by a French company,  80–130 kilometers / 50–81
but “staff include former VW design boss Murat Gunak and ex- miles
Bertone design chief David Wilkie. It looks like a cute and very  Have 3 seats
useful EV for last-mile deliveries and related services. The EV  Price is €12,255
came in #20 in European EV sales in 2013.  Available in Europe
9 The Citröen Berlingo EV is a 100%-electric version of Citröen’s  171 kilometers (106 miles)
Berlingo vans. The electric van is available in several European  Have 2 seats
countries. It is produced in France & is actually used by the French  Price is €26,220
postal service.
10 The Peugeot Partner EV is the same as the Citröen Berlingo EV.  171 kilometers (106 miles)
The electric van is produced in France but is available in  Have 2 seats
several European countries.  Price is €26,220
Source: Own construction based on (Shahan, evobsession.com/electric-cars-2014-list/, 2014)

4. Motives and Ways of Internationalization

The basic motive of firms in exporting products is to make money. However, as in most business

activities, one factor alone once in a blue moon accounts for any given action. Frequently a

combination of factors results in firms taking steps in a given direction (Hollensen, 2011).

The launching of an electric/hybrid car by a French auto manufacturer in the US market is a

business strategy that derived from serious of proactive and reactive motives that could be

advantageous for a French car manufacturer and make the product a success abroad.

4.1 Pro-active Motives

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Proactive motives represent stimuli to attempt strategy change, based on the firm’s interest in

exploiting unique competences (e.g. a special technological knowledge) or market possibilities

(Hollensen, 2011).

Among several proactive motives the following are the major firm's initiation to launch the French

manufactured electric car in the United States.

Profit and growth goals: - a French electric/hybrid car manufacturer should plan to earn from the

opportunity to generate profits by capturing a new market and generating additional sales that will

enhance manufacturer competitiveness both on a national and international perspective (Peter,

allfreepapers, 2012). When we look at France 2013 electric car sales, five out of the top six electric

vehicles (EV) models were vehicles produced in France by French companies. Those

manufacturers should find an alternative than the French market which is very competitive and

less opportunities.

Technology competence/unique product: - The French electric/hybrid car manufacturer can get

advantage from the technological competence and knowledge of French engineers and its

experience. There are several electric/hybrid car manufacturers in France and the advancement of

the technology due to competencies at national level will help to develop a product that is unique

in performance and efficiency that can be preferred by U.S. customers (Peter, allfreepapers, 2012).

In addition to this the French EV/HEV manufacturers will get benefit in implementing a product

and marketing diversification and this will increase the company's market share at global level.

(Hollensen, 2011). Similarly the launch of new EV/HEVs product to U.S. market could help

French manufacturers to improve their brand image all around the world.

Foreign market opportunities/market information: As proactive motives, the French company

needs to understand that the U.S. could be a foreign market opportunities as American people like

10
cars (they can drive since 16 years old), they all have cars. On top of that in the economic and

environmental context, hybrid cars could be great for this market to launch such car (International

marketing car industry, 2012). To substantiate the U.S. market of electric vehicles as illustrated in

Annex-III, in 2012, the demand of 100% electric and plug-in hybrid electric cars grew

tremendously and nearly three times volume of 2011 (2010 sales = 345; 2011 sales = 17,735; 2012

sales = 52,835; 2013 = 48, 489).

Zachary Shahan studied that the US market’s massive growth in demand rate in 2013 and identified

over 30 percent of the US electric cars and plug-in hybrid sales occurred in San Francisco and Los

Angeles (Shahan, Tesla Gigafactory for Electric Car Batteries, 2013). Electric vehicles penetrate

different cities in United States as Annex-IV.

Economies of scale: French electric/hybrid car manufacturers has been identified by Peter (2012)

as successful in Europe, and their market positioning of leader in France consent to the car

manufacturers to benefit from the economy of scale to produce Electric cars intended to the U.S.

as the French supply chain is already developed and implemented.

Tax benefits: Looking the US government move for $7,500 tax credit for EV purchases and the

movement to reduce foreign oil imports resulted in increasing purchase of EVs (Aulicino,

Waratuke, Williams, & Elliott, n.d.). The market for hybrid and electric vehicles is still largely

dependent on these premiums for helping it to grow and reach a critical size. French Manufacturers

involved in the sector will have the advantage of these tax shelters in U.S. (The development of

hybrid and electric vehicles, 2011).

4.2 Reactive Motives

11
Reactive motives indicate that the firm reacts to pressures or threats in its home market or in

foreign markets and adjusts passively to them by changing its activities over time (Hollensen,

2011).

Competitive pressures: - "The market opportunity of electric and hybrid cars in the US has

already been adopted by Toyota, resulting in a type of competitive pressure that French

electric/hybrid manufacturers could respond to. The Japanese car manufacturer Toyota announced

that one million cars were sold in the U.S in April 2011, eleven years after the Hybrid model of

Toyota was introduced in the U.S. With 3 million cars sold around the world, the U.S market

represents more than 30% of sales for the Toyota Prius. As a consequence of the above example

of Toyota, we can easily deduce that launching a hybrid car in the U.S is a foreign market

opportunity. Indeed, the American car market is strongly developed and many foreign car

manufacturers are already implanted. This highly developed market can be explained by the social

importance of cars, the accessibility of the driver license and the abundant and currently renewed

offer" (Peter, allfreepapers, 2012, p. 3).

Domestic market: small and saturated: - French EV/HEV manufacturers may be pushed into

exporting may be due to small home market potential in the future. For some firms, domestic

markets may be unable to sustain sufficient economies of scale and scope, and these companies

automatically include export markets as part of their market-entry strategy (Hollensen, 2011).

The same author perspective indicate that if French EV/HEV manufacturers are producing

products for domestic market, saturation will be created and forced to develop strategy for

exporting products to overseas where the demand is expected to be high.

For Peter (2012, p. 4) the size of American car market benefit the French electric/hybrid car

manufacturers from the following experience curve effects due to the large market factors.

12
  For instance, the size of the market will allow the French manufacturer to benefit of

economies of scale when manufacturing products. Let's assume that many states have

ordered cars, the general order quantity will be more important than an order for the French

car market. We can assume that the car piece are standardized

 On the other hand, the distribution conditions (costs, availability, margin etc.) are more

advantageous in the U.S, simply because the number of car dealership is more much more

significant. The size of the market can also strongly increase the product growth and

expansion.

In addition to the aforementioned motives, to reduce the environmental impact and avoid foreign

oil dependency a billion dollars spent from 2008 to 2012 to create and implement public and

private battery plug in the area of San Francisco. In addition to this Californians are already

equipped with solar installations which generate electricity. Such initiative is a supporting

condition for launching of electric vehicles into U.S. could be good opportunity for French

companies (The development of hybrid and electric vehicles, 2011).

4.3 Critical barriers

One of the critical barriers that French manufacturers will face to launch EV/HEV for U.S. market

could be language barrier as it is quite hard to attract American people without strong

communication in English language. In addition the French manufacturers will need to take care

about the American behavior, culture and how they can buy or why they are buying this car or the

other (The development of hybrid and electric vehicles, 2011).

Way of life, beliefs, and practices of human are strong attributes defining identities of the many

societies populating our universe. At the same time the unique elements that are common ground

for each society are differentiating elements, identity, about which we need to be aware of to which

13
we need to tailor our multi faceted engagements with each other. Luck of multi-cultural

knowledge, ignorance, and poor awareness as to the differences of culture from nation to nation

and within a nation, especially in countries like U.S. caused many multi-national companies to

develop products to fail.

Cultural background affects how consumers process advertising messages, and advertisers

recognize the purchasing power of the diverse ethnic groups in the United States. Recognizing this

explosive growth of ethnic markets in the U.S., French EV/HEV marketers should make every

effort to entice these lucrative ethnic markets and to develop the most effective marketing

strategies to appeal to ethnic consumers (Cao, 2009).

5. Company's International Competitiveness

5.1 Macro level

National strategy, success and competitiveness have a major influence on French auto

manufacturer to launch EV/HEV for the U.S. market (Peter, allfreepapers, 2012). Accordingly

French EV/HEV manufacturers national position, efficiency and competitiveness to export the

EV/HEV for U.S. market is evaluated at macro level using Porter's diamond as follow:-

Factor Conditions: One of the key resources that French EV/HEV manufacturers possess is the

culture of innovation that put the manufacturers in a position to posses various EV/HEV firms

within the country with products which has various performance, function and efficiency.

Considering the human resource which is kind of an issue in French because employees in the car

industry are less effective as they suffer from part time employment as the economy and the

demand has been less important since 2008 crisis (Internationa marketing, 2010).

14
Concerning the operational facilities Peter (2012) has described the specific case of Renault Zoe

electric car company factor condition as follow: Renault's important infrastructure is available in

France and abroad, headquarters are based in Paris, and this is where important decisions are made,

Renault uses external resources and outsources its production, and the assembling and

manufacturing is made in France and European countries to keep control over the quality of

products.

Demand conditions: Among France EV/HEV the Renault Zoe was the 2nd-best-selling electric

car in Europe in 2013. Despite only being available in Europe, it was the 6th-best-selling electric

car in the world in 2013 — the highest-ranking car to be available on only one continent, the

competition among EV/HEV manufacturing companies in the France market created home market

customer to pressure on firms to innovate high performance EV (Shahan,

evobsession.com/electric-cars-2014-list/, 2014).

In 2013, the French market for electric and hybrid vehicles represented 3.1% of the global

passenger car market in France. Compared to 2012, sales of electric vehicles (passenger cars and

light commercial vehicles) increased by 50% and sales of hybrid vehicles increased by 60%. In

total, 8,779 electric passenger cars were registered in France in 2013. Sales increased by more than

50% compared with the 5,663 vehicles registered in 2012. Sales volumes in France were twice as

high as in Germany (3,000 cars) and Norway (2,500 cars) (France Diplomatie, n.d.).

In addition to the above advantages "public opinion is more and more concerned by sustainable

development, and particularly by the environment problem. Those concerns about sustainable

development force the French industry to improve the quality of their product and the respect of

their environment. Those improvements bring to a total improvement of their product, process and

15
practices which is very positive for the whole industry as it prepares to be competitive on global

level" (International marketing car industry, 2012, pp. 3-4).

In terms of electric cars, French electric/hybrid car manufacturers offering different performance

range of cars and different seat targeting all type of consumers, and offer a relatively wide range

of products. The price of the electric/hybrid cars manufacturers is affordable and its targets

environmental friendly consumers aged 20 to 60.

Related and supporting industries: French EV/HEV manufacturers have a lot of relation and

network in Europe suppliers that can produce inputs that are important for innovation and

internalization. The R&D departments of these companies enabled to produce cost effective and

good performance EV/HEV in French.

According to International marketing car industry (2012) "the French car industry has a vertical

and horizontal integration. It disposes of an important network of suppliers in all the European

Union but also a network of distributers supporting it in the European zone. Unfortunately, the

zone covered by those networks is mainly Europe and does not go that further" (p. 4).

Firm strategy, structure and rivalry: As pointed out by the International marketing car industry

(2012) "the domestic competition is pretty high between the two main French car manufacturers;

as Renault and Peugeot are two important actors on the French market. Considering that all the

other European and Asian companies are also very present on the French market and appreciate

because of their low prices, the domestic competitiveness is important which means that

productivity and efficiency is a part of each manufacturer of the market. In this way, the industry,

and more specifically Renault is prepared to compute internationally" (p. 4).

5.2 Meso level analysis

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To analyze international competitiveness of the French auto manufacturers at the meso level,

Michael Porter’s Five Forces Model will be used as analytical framework. For Porter (1979) the

five Forces are competitive rivalry, buyer power, supplier power, treat of entry, and treat of

substitutes.

a) Competitive Rivalry

According to Lehman (2009) "Since there aren’t those many EV manufactures on the market yet,

the competitive force exerted by rivals are low. This scenario can change fast. Many car

manufactures are thinking of making EVs. Even though the entry barriers are very high, there are

still car manufactures that got a lot of the same technology to manufacture electric/hybrid cars.

The big difference, and also the key to electric/hybrid cars, is the batteries and the electric engine"

(p.42).

The other challenge as predicted by Lehman (2009) is "the batteries need to be able to hold a lot

of energy as well as being recharged fast. The electric engine has been on the market for a long

time and the technology can be bought from many different manufactures. It is of course important

to get an engine with high performance and which is able to use the power as well as possible" (p.

42).

In order to look at the competitive landscape of the electric/hybrid car industry Karamitsios

(2013) listed out the direct and indirect competitors as illustrated in the following matrix:

Table 2 : Direct and indirect competitors

Product Major players (or Competitiveness
upcoming)
Electric Vehicle manufactures Think, GM Volt Direct

Hybrid cars Toyota Prius, Lexus, Fisker Direct

Conventional cars GM, Crystler, VW, Porsche Indirect

Source: (Karamitsios A. , 2013)

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b) Buyer Power

Regarding the bargaining power of buyers Lehman (2009, p.45) summarized the situation as

follows "Even though the customers are the ones who bring the money, their bargaining power is

still low". For Lehman (2009) the bargaining power of customers will significantly increase from

where it was in the past (low bargaining power) if the electric/hybrid car industry is going to grow

in an increasing rate.

According to Peter bargaining power of buyers is the main threat of the car market. The same

author further explained that "on an international or national perspective, buyers have a large

choice of products, creating a highly competitive market. Moreover, today's customer expectations

are high in terms of technologies and modernity. The technologic evolution forces car

manufacturer to constantly come up with innovative product and solutions. End customers have a

relatively strong bargaining power as the used-car market is currently booming and customers are

budget-minded. As a result, we can observe the price of new vehicles strongly decreasing and

companies offer new financing methods adapted to the customer buying power. If French

electric/hybrid car manufacturers decides to export their products to the U.S, but to a distributor,

the bargaining power of the distributor will be high, as the distributor will take a major risk by

offering a product that is not present on the market" (p.12).

c) Supplier Power

One of the suppliers of French EV/HEV manufacturers are Europe suppliers that can produce

inputs that are important for innovation and internalization and has a lot of relation and network

with suppliers.

18
The bargaining power of Suppliers is average as car manufacturers purchase in bulk and there is

long term relationship with supplier. But this scenario will change to high bargaining power of

supplier in case the supplier able to provide high technology equipment and consistently meet

order deliveries (Peter, allfreepapers, 2012).

d) Treat of Entry

For Lehman (2009) "the complementary of the electric/hybrid industry are the power industry as

well as the oil industry. The power industry has a great interest in the electric/hybrid becoming a

success – this will sell more power. On the other hand is the oil industry not that interested in this

new vehicle. This will affect one of their main sources of income" (p. 44).

The potential new entrants and their respective power as indicated by Aulicino, Waratuke,

Williams, and Elliott, (n.d.) is that new entrants with similar technologies has low power. On the

other hand new entrants with disruptive technologies have high power, these include: Large mass-

market manufacturers (Chevrolet, GM, Toyota), Luxury performance sports cars (BMW, Porsche,

Mercedes), other boutique manufacturers (Italians and Aston Martin). Besides that French

electric/hybrid car manufacturer is also facing some challenges from the currently coming none

fossil fuel technologies like hydrogen and natural gas (Hall, 2013).

The challenges mentioned above are further exacerbated by factors like strategic shift towards

gasoline electric hybrids; the promising believes for fuel cells than battery electric cars; and the

obvious short comings i.e. driving range, cost and recharging time of electric vehicles is putting

them not to become a natural replacement for the conventional cars (Shirouzu, Kubota, & Lienert,

2013).

e) Treat of Substitutes

According to Lehman (2009) "The other force which is very strong is the substitute products. Most

people still choose to buy a normal car, which of cause makes the car industry the largest
19
competitor. It is because of the substitute products that the competitive force all together is high

and still makes the industry less attractive. Firm in the industry should at all time pay attention to

the competitive force, since it can change at all time" (p.46).

On top of the aforementioned situation the following are some of the major indications for the

increasing treat of substitutes for French electric/hybrid car manufacturers: First there is a

continues development on solar cell design and car power supply requirements like heater or air-

conditioning (Bellis, 2014). Second there is a strategic shift by automotive executives in Asia,

Europe, and North America to new alternative energy sources like hydrogen. Finally the move by

Nissan to follow its rival Toyota in changing its power generation for the next big green-tech

innovation of hydrogen to electricity and the new alliances of Toyota and BMW to develop

hydrogen powered fuel cell cars are the major indicators of aggravated treat for new technology

(Shirouzu, Kubota, & Lienert, 2013).

To substantiate the analysis of the five forces to look at the industrial environment of

electric/hybrid cars, the three types of competitors namely Immediate, Impending and invisible

competitors of French electric/hybrid car manufacturer are concisely summarized by Aulicino,

Waratuke, Williams, & Elliott (n.d.) in the following illustration:

Table 3: Competitor Environment

Immediate Competitors
• BMW, Nissan Leaf, Daimler, Lexus, Audi, Fiat, Think, Aptera, Fisker, Coda, Zap , Volkswagen
and Volvo – Direct competitors in EV market
• Toyota – Hybrids successful but not completely green- Direct competitors in Hybrid car market.
• Smart – Successful - Direct competitors in Hybrid car market

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 Impending
• Ford, GM, Hyundai, Honda, Etc. – Potential competitors

Invisible
• As EV industry grows, more competitors will enter market
• New startups will appear
• Disruptive technologies will appear

Source: (Aulicino, Waratuke, Williams, & Elliott, n.d.)

5.3 Micro level

Supplier- The French electric/hybrid car industry has a vertical and horizontal integration. These

French EV/HEV manufacturers have a lot of relation and network in all Europe suppliers that can

produce inputs that are important for innovation and internalization. In addition to this, the French

electric/hybrid car manufacturers have also a network of distributers supporting it in the European

zone. However; the zone covered by those networks is mainly Europe and does not go that further.

The R&D- The departments of the French EV/HEV companies enabled to produce cost effective

and good performance EV/HEV in French. This can be exemplified as stated in Table 1 above;

the travel range (kilometer) with single battery charge of various vehicles produced by different

French electric/hybrid car manufacturers indicate as there is extensive R&D to upgrade the

performance of EV/HEV.

Peter (2012) described that among French EV/HEV manufactureres "Renault's value chain is well

implanted and efficient in France and its structure is part of its success in Europe market. Renault

strongly invests in research and development in order to provide constant innovations. The

production is mainly outsourced, but the assembly is made in France and over Europe" (p.12).

Marketing & Sales- The same author further explained taking as example the Marketing & Sales

of French car Manufacturer Renault as it has important marketing budgets and uses advertisement

21
as a competitive tool. Regarding sales and service, Renault owns its own car dealership in France,

and some other have the exclusivity to sell Renault cars. This way, the company has a maximum

impact in the market and controls its sales and customer service in official dealerships.

When we look at another French car manufacturer the Peugeot iOn is really appreciated in France.

All customers like this brand for its history and innovative side.

According to Peter (2012) as international marketing plan for the launch of an electric / hybrid car

by a French auto manufacturer in the U.S. market should consider the following points:-

 "In the U.S, the company would have to review is marketing and sales process of the value

chain. Indeed, a French manufacturer has no presence in the American market and car

companies have different approach of marketing and sales in the United States. Marketing

techniques are the core solution to generate sales as well as customer retention and

customer service. Customer relationship management is much more evolved in the U.S

than it is in France. In order to best deal with these differences, French Manufacturers

should establish a strong competitive analysis on competitors, a behavior analysis on

customers and an in-depth bench-marking about American marketing strategies. This way

they will benefit from the U.S market knowledge accumulated in research marketing and

combine it with their national skills of leader and develop a potential sustainable

competitive advantage"(p.12).

 "More precisely, the competitive benchmarking should be conducted from two

perspectives. First, an analysis of each step of the competitions value chain in order to

distinguish the competition core competences. This will allow a French electric/hybrid car

manufacturer to understand the competition strengths in terms of production and supply.

The second benchmarking perspective should be conducted on customers, their

22
 expectations and behavior. This benchmark will allow a French electric/hybrid car

manufacturer to understand the customer mind-set and its perceived value. As a result, a

French electric/hybrid car manufacturer will be able to adapt its upstream and downstream

strategy in order to compete with American car manufacturers and offer an adapted value

proposition to the market" (p.13).

Based on trough analysis of macro, meso and micro level for launching an electric / hybrid car by

a French electric/hybrid car manufacturer for the U.S. market allows us to state points that are

believed to be very critical factors for the success of the company and which will give hints for

the American car market is summarized as follow:

Apply creative promotional campaigns to further enhance brand recognition and

positioning as brand image has a strong importance in the United States.

Further capitalizing on innovative corporate culture and strong R&D capabilities to reduce

charging time for batteries and to increase the range EV/HEV can go in a single charge,

aiming to gain competitive advantage.

Try to minimize possible supplier problems to accommodate the future expected significant

increase in demand through backward integration.

Supply Chain Management: Competitive prices due to reduction of costs linked to the

supply chain management and efficiency.

Diversification Strategy: Based on alliances and horizontal collaboration.

Understanding of the market: Based on marketing research including: customers,

competition, target culture and behavior.

23
6. Political and Economic Barriers /with respect to export of electric/hybrid cars to the

U.S.

6.1 Political Barriers

From a political perspective, several barriers have to be considered when exporting cars: "The

American government is directly involved in the automotive industry. If we take the example of

General Motors one of the top 3-car company of the U.S treasury, the government owns 33% of

the company. (Brendan Moore, 2011). It allows us to assume that the government has a certain

control over American corporations. Another example supporting this statement is the investments

made by the U.S Government in favor of Chrysler. Even though the government recently ended

its investments, it shows that the American government is supporting national car companies. As

a result, the exportation of a French electric/hybrid cars in the U.S might be complicated as the

government has more or less a market control. We can also notice that the American government

has a strong influence on the legal system and it could affect a French electric/hybrid car

manufacturer in its launch" (Peter, allfreepapers, 2012, p. 4).

According to International marketing car industry (2012) the following are the political barrier that

a French car manufacturer should consider to launch an electric/hybrid car in the U.S.

 United state government restriction:- Every government needs restriction in order to

regulate the tariff, take care of their populations, etc

 National Export policy: - Every government needs to have some rule in order to regulate

the export in the country in order to reduce the different risks. We need to take care about

those policies and be focus on it.

 Foreign exchange controls imposed by the American Governments: - all the products

are not accepted in the America governments. If a French company wants to launch an

24
 electric/ hybrid car, it will be important to know if it can build it in France or if there is

something to change on the car (environmental aspect, performance, etc)

 Exchange Controls: - The American Government, like every government, controls the

product that are coming in the country.

 Labor restrictions strong union: - The labor low is different in different country and the

French car manufacturer should understand those restrictions to launch EV/HEV product

in U.S.

 Change of Government party: - in U.S. there are two main parties; the republican one

and the democratic one. Both are not apply the same policy. If a product needs to be launch

on the American market, the company will need to be focus on which party is the

government and adapt itself to that and the restriction in place.

6.2 Economic Barriers

One of the economic barriers that will happen if the French car manufacturer chooses the

exportation of electric/hybrid car to penetrate the U.S. market is the problem of currency. The

difference in currency of the two countries will result a problem in the accountancy, because the

production would be in Euros and the sales in Dollars. That would be, and a problem of higher

cost of production than cost of goods sold. In addition one of economic barrier is the distributor

network. A French car manufacturer does not know anything about the distribution network in the

U.S.

Peter (2012) explained taking one of the French electric car manufacturer Renault " if it exports

its electric cars in the U.S, it will have to sell cars at a much higher price in order to make the same

benefit as in France as €1 equals $1.26. If we take an example of Renault selling a car €10,000 in

France, the company will have to sell it for $12,667 in order to make the same profit on the car

25
sold. This might represent a difficulty as the car market is competitive in term of prices and the

company could lose potential market share if setting high prices, making cars unaffordable"

(Simon Kennedy and Patrick Donahue, as cited in Peter, 2012, p. 5).

Peter (2012) differentiates other barriers to international trade of cars. These include the shipping

costs, risks and other concerns of international trade. Related to these risks, some of the economic

barriers are more specifically distinguish in the following categories:

Trade barriers: "Regarding the economic barriers, it could be hard for a French company to

compete a huge American company/competitor like General Motors that is appreciate in all the

United States. Because of that, the American people are not waiting any foreign competitors"

(International marketing car industry, 2012, p. 7).

Tariffs barriers: Cars imported in the U.S are dutiable and it represents an additional potential

cost. A French electric/hybrid car manufacturer has to be aware of these potential costs and highly

informed about American standards and regulations in terms of foreign cars (Peter, allfreepapers,

2012, p. 5).

Non-Tariffs: "The American government has specific regulations that are different from France

standards. Agencies such as EPA (Environment Protection Agency) and DOT (Department of

Transportation) provide information about requirements of the U.S Customs Service. These

agencies provide information about & quota; safety standards, bumper standards, and air pollution

control (emission) standards & quota;" (Foreign-Born, 2010 as cited in Peter, 2012, p. 6). The

above agencies also require some administrative forms to be completed, making the administrative

process longer (Peter, allfreepapers, 2012)

7. The Influence of Culture on the International Marketing Strategy

26
To analyze the influence of culture on the international marketing strategy to launch EV/Hybrid

cars by French manufacturer for the U.S. market, Hofstede and Hall models are adapted as points

of reference as follow:

7.1 Hofstede's Model

According to Hofstede (as cited in Peter, 2012) different cultures have different perceptions and

interpretations of things. As illustrated by Peter (2012, pp. 6-7) Hofstede's model of national

culture separates five different aspects as follow:-

i) Power Distance: we can consider that some inequality can be considered between French

and Americans. In physical and educational terms, both cultures have different values and

principles. Even though the politeness is strongly present in the U.S, a certain distance has to be

respected.

ii) Uncertainty Avoidance: is much more present in the U.S as it is in France. In the U.S,

rules, norms and laws are strongly approved and respected whereas in France, people often

disagree an uncertainty is more frequent. In the U.S, avoiding uncertainty results in strong

planification and coordination. This aspect might cause some cultural misunderstanding and

tensions between both cultures.

iii) Individualism: is present in the US culture, whereas in France, the culture can be

considered as group oriented or community. The social status and person is considered and

rewarded in the U.S, while in France, groups and communities are favored.

iv) Masculinity: is strongly present in the U.S, especially in the business environment where

success, salary, cars, watch and social representation matter a lot. Masculinity is less present in

France, where talking about income is often perceived as rude. Moreover, the feminine role of

women in business is being defended and increasing in France (unions).

27
v) Time perspective: is completely different in the French and American culture. Indeed, the

American culture is focused on the future and often projecting on future project, forecasts and

expansion. On the other hand, the cultural and historical background of France is part of the nation

pride and French often refer to the past as a reference. Protectionism of the historical French culture

and protocol is strongly implemented and installed in the French values. This perspective might

cause some issues when discussing future plans, Americans can be perceived as too confident and

optimistic, whereas French might be focused on analysis based on the past.

7.2 Edward Hall

Based on Hall's Model, Peter (2012) explained communication context and the Customer-oriented

culture aspects as follow:-

a) Hall's communication context

According to Hall's (as cited in Peter, 2012) "communication context, the French culture can be

considered as a high context culture whereas the American culture as a low-context culture. As a

result, many cultural factors differ between both cultures, leading to potential cultural clashes.

Elements such as time, money, relationships, business, communication, beliefs, values and norms

constitute strong cultural differences. For example, it is common measure to develop relationship

at work in France and being 5 minutes late is tolerated. In the U.S, business relations are based on

deals and achievements, and punctuality has a major importance in business affairs. These two

examples highlight the cultural differences that might lead to cultural misunderstanding and

inefficient business relationships"(pp. 7-8).

The same author further identified that If French EV/hybrid car manufacturer launching its

electronic cars in the U.S, the business relationships might be problematical and build barriers to

28
success. To have knowledge of these cultural differences will smooth the process of conducting

international business.

b) The Customer-oriented culture

According to Peter (2012) "The American culture is oriented on customer service and its quality.

Indeed, companies view customer relationship management (CRM) as a way to develop customer

loyalty and improve customer service. As a consequence, the approach of personal selling is very

different from one culture to another. In France, personal selling is much more impersonal and

sellers are only here if the customer requires any information. In the U.S, we fall under the

impression that the seller is here to guide the customer through the brand, its product or services

and convince him of the company's products. Personal selling in the U.S will oriented on

communication and customer attention, whereas in France, the customer first makes his own

opinion of the product, and then the communication will go from the customer to the seller. In the

U.S, the communication is more like a dialogue and starts from the seller to the customer. French

sellers are convinced that if the product does not meet the customer's expectations, then he will not

be likely to buy it. In the U.S, even though the product does not meet the customer's expectations,

the seller will try to convince the customer with commitment and defend its product/brand" (p.8-

9).

As a consequence, a French customer in the U.S will feel stalked whereas the American customer

in France will feel abandoned. French EV/Hybrid car manufacturer needs to focus on these aspects

if implementing a distribution center, a license or any type of sales that could involve a customer.

8. The type of market entry modes that the French car manufacturer should consider

According to Hollensen, (2011) entry mode is an institutional arrangement for the entry of a

company’s products, technology, human capital and services into a new foreign market. The main

29
types of entry modes are export, intermediate and hierarchical modes. The same author explores

these types of entry modes as follow:

i) Export modes: "With export entry modes a firm’s products are manufactured in the

domestic market or a third country and then transferred either directly or indirectly to the host

market. Export is the most common mode for initial entry into international markets. Sometimes

an unsolicited order is received from a buyer in a foreign country, or a domestic customer expands

internationally and places an order for its international operations. This prompts the firm to

consider international markets and to investigate their growth potential. Exporting is thus typically

used in initial entry and gradually evolves towards foreign-based operations. In some cases where

there are substantial scale economies or a limited number of buyers in the market worldwide (e.g.

for aerospace), production may be concentrated in a single or a limited number of locations, and

the goods then exported to other markets" (Hollensen, 2011, p. 335).

The commercial activity of export modes is very important as it allows boosting an economy with

highlighting the companies and its country efficiency in a global world.

ii) Intermediate entry modes: "are primarily vehicles for the transfer of knowledge and skills

between partners, in order to create foreign sales. In addition to this there is no full ownership (by

the parent firm) involved, but ownership and control can be shared between the parent firm and a

local partner. This is the case with the (equity) joint venture" (Hollensen, 2011, p. 356).

Hollensen (2011) explaned the most relevant intermediate modes as follow:

a) Contract manufacturing: is outsourced to an external partner, specialized in production

and production technology. It enables the firm to have foreign sourcing (production)

without making a final commitment.

30
 "Management may lack resources or be unwilling to invest equity to establish and

complete manufacturing and selling operations, but contract manufacturing keeps the

way open for implementing a long-term foreign development policy when the time is

right. These considerations are perhaps most important to the company with limited

resources. Contract manufacturing enables the firm to develop and control R&D,

marketing, distribution, sales and servicing of its products in international markets, while

handing over responsibility for production to a local firm" (p.356).

b) Licensing: The licensor gives a right to the licensee against payment, e.g. a right to

manufacture a certain product based on a patent against some agreed royalty. It is another

way in which the firm can establish local production in foreign markets without capital

investment (p.358).

c) Franchising: The term franchising is derived from the French, meaning ‘to be free from

servitude’.

In Franchising, the franchisor gives a right to the franchisee against payment, e.g. a right

to use a total business concept/system, including use of trade marks (brands), against

some agreed royalty (p. 361).

"Franchise activity was almost unknown in Europe until the beginning of the 1970s. The

concept was popularized in the United States, where over one-third of retail sales are

derived from franchising, in comparison with about 11 per cent in Europe" (Young et al.,

1989, as cited in Hollensen, 2011, p. 361).

A number of factors have contributed to the rapid growth rate of franchising. First, the

general worldwide decline of traditional manufacturing industry and its replacement by

31
 service-sector activities has encouraged franchising. It is especially well suited to service

and people-intensive economic activities, particularly where these require a large number

of geographically dispersed outlets serving local markets. Second, the growth in

popularity of self-employment is a contributory factor to the growth of franchising.

Government policies in many countries have improved the whole climate for small

businesses as a means of stimulating employment

d) Joint venture: is an equity partnership typically between two partners. It involves two

‘parents’ creating the ‘child’ (the joint venture acting in the market) (p.366).

Hollensen, (2011, p. 366) pinted out that there are a number of reasons setting up joint ventures:

Complementary technology or management skills provided by the partners can lead to

new opportunities in existing sectors.

Many firms find that partners in the host country can increase the speed of market entry.

Many less developed countries, such as China and South Korea, try to restrict foreign

ownership.

Global operations in R&D and production are prohibitively expensive, but are necessary

to achieve competitive advantage.

In joint venturing companies put their knowledge, technologies and resources to reach objectives

that each company could not have reached alone. This also allows the companies to share the risks

and profits that the joint venture engenders (International marketing car industry, 2012, p. 6).

iii) Hierarchical entry mode: is the final group of entry modes is the hierarchical mode,

where the firm completely owns and controls the foreign entry mode. Here it is a question of where

the control in the firm lies. The degree of control that head office can exert on the subsidiary will

depend on how many and which value chain functions can be transferred to the market. This again

32
depends on the allocation of responsibility and competence between head office and the subsidiary,

and how the firm wants to develop this on an international level (Hollensen, 2011, p. 386).

If a producer wants greater influence and control over local marketing than export modes can give

it is natural to consider creating their own companies in the foreign markets. However, this shift

involves an investment, except in the case of the firm having its own sales force, which is

considered an operating cost (Hollensen, 2011, p. 386).

We have seen the main groupings of entry modes available to companies that wish to take

advantage of foreign market opportunities in the aforementioned section.

A firm’s choice of its entry mode for a given product/target country is the net result of several

conflicting forces. The need to anticipate the strength and direction of these forces makes the entry

mode decision a complex process with numerous trade-offs among alternative entry modes (

(Hollensen, 2011, p. 322).

Generally speaking the choice of entry mode should be based on the expected contribution to

profit. This may be easier said than done, particularly for those foreign markets where relevant

data are lacking. Most of the selection criteria are qualitative in nature, and quantification is very

difficult.

It cannot be stated categorically which alternative is the best. There are many internal and external

conditions which affect this choice and it should be emphasized that a manufacturer

wanting to engage in global marketing may use more than one of these methods at the same

time. There may be different product lines, each requiring a different entry mode.

Accordingly the following entry mode is suggested based on the internal & external factors as

follow:

33
French Electric /Hybrid car manufacturers are limited in France market only. As a result French

manufacturers could choose export entry modes to penetrate the U.S. market by producing

products in France that avoid high cost of delocalization. The cost incurred during exporting is for

transport, transport insurance and change in rate. This type of entry modes is advised for French

electric/hybrid car manufacturers that have limited resource. For some firms, domestic markets

may be unable to sustain sufficient economies of scale and scope, and these companies

automatically include export markets as part of their market-entry strategy. As the firm grows it

will increasingly use the hierarchical model.

Peter (2012) described that taking into account exportation as a market entry strategy is a valid

option for French electric/hybrid car manufacturers to limit their investment by exporting their

products and it will allow the company to analyze customer reaction and limit expenses and

implication. The same author further explained that exporting a limited number of Renault's ZE

would be a way to test the market reactivity and determine a future strategy. Nevertheless, this

entry strategy would be unproductive as the market competitiveness as intense.

The French EV/HEV manufacturers do not have an international experience. International

experience reduces the cost and uncertainty of serving a market, and in turn increases the

probability of firms committing resources to foreign markets, which favors direct investment in

form of wholly owned subsidiaries (hierarchical modes). These modes could be choosing by

French manufacturers to acquire assets such as plants and production equipment in the United

States. In consequence, the company is producing in U.S. and sells its product in the same country's

market. This could allow French manufacturer to control everything from the beginning to the end,

and to reduce the cost of car, as cars would be produced in dollar and sold in dollar, which would

34
not be the case with using the exporting solution for example (produced in Euros and sold in

Dollar).

United State is large sized country in the world and the rate of electric car market growth is high.

According to Hollensen, (2011) the larger the country and the size of its market, and the higher

the growth rate, the more likely management will be to commit resources to its development, and

to consider establishing a wholly owned sales subsidiary or to participate in a majority-owned joint

venture.

I addition to this a joint venture with an American car manufacturer to penetrate the market is

easier, because the car industry in U.S. is under the state protection, and that can be hard to compete

(International marketing car industry, 2012).

As declared above, developing horizontal collaborations will benefit French manufacturers when

entering the American market with its new electric cars. Peter (2012) explained taking the case of

Renault that establishing a joint venture with an American car manufacturer, Renault transfer the

technology and models to the U.S. and the American corporation helps to introduce market and

distribute the models. In addition, this type of alliance will also assist the company to be accepted

by the competition, the government, and most importantly, customers. Using the joint venture

strategy will also allow French EV/HEV manufacturers to keep a minimum of control upon their

products.

9. International Product Life-Cycle and its implications for the electric /hybrid car

9.1 International Product Life Cycle (IPLC)

According to Hollensen (2011) the IPLC theory describes the diffusion process of an innovation

across national boundaries. As illustrated Figure 1, for each curve net export results when the

35
curve is above the horizontal line; if the curve is below the horizontal line net import results for a

particular country.

The international product life cycle is a theoretical model describing how an industry evolves over

time and across national borders. This theory also plans the development of a company’s marketing

program when competing on both national and foreign fronts. International product life cycle

concepts combine economic principles, such as market development and economies of scale, with

product life cycle marketing and other standard business models (Wisegeek, 2014).

The IPLC is further summarized by (Professor Cooney, 2014) as follow:-

Describes diffusion of an innovation across national boundaries.

Demand grows first in innovating country and is then exported.

Eventually demand grows in Low Developing Countries (LDCs).

Figure 1; IPLC curves

36
Source: Power point on international marketing (Onkvisit and Shaw, as cited in Professor Cooney,
2014, p. 256)

According to Hollensen (2011) when expanding the concept of the PLC to international markets

two different approaches appear summarized as follow:

a. International product life cycle (IPLC) – a macroeconomic approach

IPLC is considered from a macroeconomic perspective that views typically, demand first grows in

the innovating country (here the United States). In the beginning excess production in the

innovating country (greater than domestic demand) will be exported to other advanced countries

where demand also grows. Only later does demand begin in less developed countries. Production,

consequently, takes place first in the innovating country. As the product matures and technology

is diffused production occurs in other industrialized countries and then in less developed countries.

Efficiency/comparative advantages shift from developed countries to developing countries.

Finally, advanced countries, no longer cost-effective, import products from their former customers.

b. PLCs across countries – a microeconomic approach:

In foreign markets the time span for a product to pass through a stage may vary from market to

market. In addition, due to different economic levels in different countries, a specific product can

be in different PLC stages in different countries. Figure 2 shows that the product (at a certain time,

t1) is in the decline stage in the home market, while it is in the maturity stage for country A and in

the introduction stage for country B.

Figure 2: PLCs of different countries for a specific product

37
Source: Power point on international marketing (Professor Cooney, 2014, p. 258)

The four primary elements of the international product life cycle theory are: the structure of the

demand for the product, manufacturing, international competition and marketing strategy, and the

marketing strategy of the company that invented or innovated the product. These elements are

categorized depending on the product’s stage in the traditional product life cycle (Wisegeek, 2014).

The stages of the basic product life cycle, Introduction, growth, maturity, and decline are explained

as follow:-

The Introduction Stage of Product Life Cycle

The introduction phase of the product life cycle (PLC) can be explained from technology,

marketing and production aspects by Grant, Armstrong and Kotler (as cited in McGrath, 2012)

as follows:-

From technological perspectives the introduction phase of product life cycle is characterized by

emerging technology, early technology S-curve, and state of the art but buggy market experiments

of lab results. In addition to that the marketing practice is aiming at creating product and

38
technology as well as establishing legitimacy, innovative customers low level of

performance/price ratio due to high cost driven prices, low sales and revenue volumes, negative

profit margins for true long term strategies and positive profit margins for hit and run strategies as

well as few incompatible competition that shape the opportunity for the future.

In addition to the aforementioned points during the introduction stage, the product is new and not

completely understood by most consumers. Customers that do understand the product may be

willing to pay a higher price for a cutting-edge good or service. Production is dependent on skilled

laborers producing in short runs with rapidly changing manufacturing methods. The innovator

markets mostly domestically, occasionally branching out to sell the product to consumers in other

developed countries

Finally this phase is characterized by high production unit costs, low scale and lack economic of

scale, job shape batch production process selection and fixed position process. International

competition is usually nonexistent during the introduction stage of the international product life

cycle.

The Growth Phase of Product Life Cycle

The growth phase of the product life cycle can be explained from technology, marketing and

production aspects by Grant, Armstrong and Kotler (as cited in McGrath, 2012) as follows:-

Looking at the technological conditions of this stage it is characterized as pacing, rising S-curves,

and incompatible product variations until dominant design appears.

Gaining market share by attracting customers that are early adopters is one aspect of the marketing

condition that typically explains this stage. In addition to that when we look at the

price/performance aspect of marketing, the growth stage is typically characterized by enhanced

performance that emanate from rising S-curves. Increasing sales/revenue, positive and rising wild

39
profit variations that establish common profitability in addition to signaling new competition are

the other marketing dimensions that are typical to this stage of product life cycle.

During the growth stage competitors in developed markets begin to copy the product and sell

domestically. These competitors may also branch out and begin exporting, often starting with the

county that initially innovated the product. The growth stage is also marked by an emerging

product standard based on mass production. Price wars often begin as the innovator breaks into an

increasing amount of developed countries, introducing the product to new and untapped markets.

Finally, looking at the production unit costs, process selection, and process layout; falling in

transition, batch mass production, and process are the typical characteristics that represent the PLC

respectively.

The Maturity Phase of Product Life Cycle

The maturity stage the product life cycle can be best explained by taking into account dimensions

of technology, marketing, customers, performance/price, sales/revenue, competition production

unit costs, process selection and process layout as it has been illustrated by Grant, Armstrong and

Kotler (as cited in McGrath, 2012) as follows:-

Regarding technology the maturity phase is identified by the condition of having key technology

and the technology S-curve breches their natural limits. At this stage there are sophosticated

consumers who have high quality expectetions accordingly at this stage many competitors run out

of business if they are not in a position to satisfay the sophesticated expectetions and preferences

of consumers.

40
In this phase of the product life cycle the marketing effort of business organizations focuses on

defending their market share in order to maximaize profit. This is done by shifting their marketing

efforts from early adopters to the mass consumers, with enphasis on repeate purchase if possible.

This implies that the performance/price ratios are higher and highest due to the exsitance stable

performance at lower prices associated with the exisitance of high production rates and high

demand.

This stage of the product life cycle also characterised by the precence of many but similar

competitors with no dominet better design and products mostly differ in some product features

which has little in differnciating the product of one player from another. This implies that the profit

margin at this stage is increasing at decrising rate then stagnates.

At some point of this maturity stage of the international product life cycle and even the global

marketplace becomes saturated, meaning that almost everyone who would buy the product has

bought it, either from the innovating company or one of its competitors. Businesses compete for

the remaining consumers through lowered prices and advanced product features. Production is

stable, with a focus on cost-cutting manufacturing methods, so that lowered prices may be passed

on to value-conscious consumers.

Finally when we look at the production unit costs in this stage we found that there is high

economics of scale and economics of scope which implies that there is high asset utilization and

this is supported by the exisitance of a mechanized mass production process to satisfay customers

at mass customization which is made by making the process layout to be configered based on

product that can accomodate fleaxible manufacturing.

The Decline Phase of Product Life Cycle

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Like the other phases as identified by Armstrong and Kotler (as cited in McGrath, 2012), this

stage of the product life cycle can be best explained by taking into account dimensions of

technology, marketing, customers, performance/price, sales/revenue, competition production unit

costs, process selection and process layout as follows:-

The type of technology that exist at this stage can be explained differently by different authors for

example degraded by Burgelman, Kosnik, and Van Den poel (1988); S-curves reaching at the top

which implies a need for discontinuity by Foster and Schilling (1986a; 1986b); and rationalized to

clear remaining markets by Grant,2002 Armstrong, and Kilter, 2002.

This phase of the product life cycle is a direct opposite of the growth phase. At this phase the

marketing effort of the company is directed at the existing product rather it has to do with the

development of a completely new product in other words products at this stage identified as cash

caws in which we harvest cash to invest in next generation products. The customers at this phase

are consequently the late comers or lagers that are identified by socio economic and psychological

characteristics of markets and niches (for example the market for type writers and black and white

TV's).

This stage is also characterized by a declining sales/revenue and a performance/price ratio which

is high but stable though continued profitability is not guaranteed as the S-curves reach near natural

asymptotes. This implies the profit margin is probable based on the market niche served. And the

competition in this stage is among survivors whose main objective is directed towards recovery

and rationalization.

Product innovators must guard both foreign and domestic markets from international competition,

while finally breaking into riskier developing markets in search of new customers. When the

product reaches the decline stage, the innovators may move production into these developing

42
countries in an effort to boost sales and keep costs low. During decline, the product may become

obsolete in most developed countries, or the price is driven so low that the market becomes close

to 100% saturated.

Finally when we look at the production unit costs at this stage as long as capacity is utilized it is

generally low. This stage is also identified by batch or mass production process depending on the

market niche served; hence it may be supported by process layout based on process or flexible

manufacturing.

9.2 PLC Implications for the Electric/Hybrid Car Models

Based on international PLC, electric/hybrid cars are still in the introduction phase. The company

has to increase their sales revenue and improve their profitability by introducing their products to

international market. Traditionally, the introduction phase of PLC will have justified their

investment and then the company will have maximized values in later stages how they manage

and arrange their effort on product development. Electric/hybrid car manufacturers should align

their product strategy throughout all the phases of life cycle across the key strategic dimensions

stated below:-

Strategic Implications of the Product Life Cycle at Introduction Stage

At this stage of the product life cycle "A major issue for strategists is to understand the dynamics

of how consumers adopt new products or from the technology point of view, how technology

diffuses" (McGrath, 2012, p. 30). This implies that for a new product development to be

successfuly comercialized firms should understand the needs and preferences of the customers

inorder to solve custumers problem or to create them opportunities through the new technologies.

Strategic Implications of the Product Life Cycle at Growth Stage

43
According to McGrath (2012) Operations planning should begin concomitantly with marketing

during new product development, as part of an overall strategy because it is during the growth

phase that any lack of previous planning will become obvious and be potentially disastrous to

overall product success.

The same author emphasized that without equivalent and similar developments in the evolution of

process technologies like production forecasting, facility capacity, facility location, process

selection, and facility layout, it is not possible for a product technology to succeed as a total product

in the market place.

Strategic Implications of the Product Life Cycle at maturity Stage

In the maturity stages it is strategically unjustifiable to commit investment in innovations. This is

supported by agency theory which provides a base for free cash flow hypothesis i.e. as business

reach maturity stage they are more likely to have huge amount of free cash flow, accordingly

organizations should milk the cash caw in the maturity stage to enhance their return on investment

that has been incurred for the technology that is introduced at the initial phase and reached its

maturity stage (Chowdhury, 2004).

Strategic Implications of the Product Life Cycle at Decline Stage

 Firm's decrease their investment in research and development i.e. there is little

innovation in the existing product and technology rather they look to invest on

completely new products.

 Firm's engage in cash caw i.e. harvest cash to invest in next generation products.

 Firm's are concerned more about the late comers or laggards.

When we look at the PLC of EV/HEV manufacturers in French - Technology is emerging for the

electric vehicles and it is at introduction stage of product innovation. Production unit cost is high,

44
low scale of economics due to the beginning of the Electric manufacturing in French. Competition

with similar technology is in introduction phase-head to head competition between EV

manufacturers and product is at introduction phase.

Peter (2012) asserted based on Renault's case of launching Renault's ZE electric cars in the U.S

that "the IPLC could have two growth curves; one in France and one in the U.S. The product is

new on the market and it still at an early growth stage in France. In a few years, we could consider

another growth curve starting at the level of the first maturity curve. This second growth would be

explained by the success of the ZE cars in the U.S, while the French market is already reaching

the maturity" (p. 15).

French manufacturers launching of electric/hybrid cars in the U.S, the IPLC could have two growth

curves; one in France and one in the U.S. The product is new on the market and it still at an early

growth stage in France. In a few years, we could consider another growth curve starting at the level

of the first maturity curve. This second growth would be explained by the success of the French

electric/hybrid cars in the U.S, while the French market is already reaching the maturity.

10. Conclusions and Recommendations

10.1 Conclusions

One of the policy options pursued by the United State federal government is to establish various

incentives for investors in the green-technology through the adoption of electric cars. Similarly the

implementation of an environmentally responsible public policy at the national and local level and

the supply of vehicles produced by French manufacturers have enabled France to become the

largest electric vehicle market in Europe. Among the Electric Vehicle manufacturers in French,

Renault has played a pioneering role to achieve this top ranking.

45
Customers are increasingly demanding fuel saving cars. As a result, large numbers of car

manufacturers are now looking into solutions that involve electrifying their vehicles. But not all

car manufacturers are necessarily using the same strategies and have not aggressively moved to

electric cars. The electric cars still cannot compete with the long range of gasoline powered cars

and the fast refill times. However, government mandates to increase the taxation for petrol and

strict regulation in pollution will help the development of electric cars in the future.

An analysis of Porter's 5 forces model allows us to affirm that the international car market is highly

competitive and that current manufacturers are in an intense rivalry to find the best innovation of

electric/hybrid cars and conquest the most customers or distributors. As the environmental

awareness for green technology in U.S. is increasing from time to time in addition to the economic

benefit that they expect to get from decreased cost of diesel over time, the bargaining power of

electric/hybrid car consumers is not going to be very significant.

There is a lot of car market opportunity in U.S., from the number of potential customers to the

consumption habits of the people. However, it is not easy to penetrate this market with a French

manufactured electric car due to the existence of various economical and political barriers that

break the implementation of marketing plan of a French manufacturer launching electric/hybrid

car for the U.S. market. A French EV/HEV manufacturer must benchmark and study a lot of the

U.S. culture, legislation, and economy, to see if they have a chance to succeed in this particular

sector and country.

The electric vehicle is still in the introduction phase. In 2009, the market share was only in the

single digits for several major markets (e.g. 7% in Japan and 3% in U.S). The projected market

share for 2020 will grow to 13 percent in United States.

46
When we look at the International Product Life Cycle of EV/HEV manufacturers in French -

Technology is emerging for the electric vehicles and it is at introduction stage of product

innovation. At this stage of the product life cycle a major issue for strategists is to understand the

dynamics of how consumers adopt new products or from the technology point of view, how

technology diffuses.

The general lesson that we can get from generic pattern of international product life cycle is that

at the different phases of the life cycle there are different strategic decision that organization to

pursue in order to be competitive.

The IPLC of electric cars can strongly vary, as it is an innovation that is needed today and still will

be over the next years. The particularity of this product and the long-term investment of companies

in electric and hybrid technology will strongly influence the PLC curve and hopefully highlight

the beginning phases.

From one of French electric vehicle manufacturer Renault's perspective, looking the national

market in France with its electric cars is justified as it has a position of leader and has a high market

share. On the other hand, exporting its ZE range of products in the U.S might be a more difficult

challenge when we compare the cost i.e. the base Nissan Leaf costs in France is €18,090 but

Renault Zoe — €20,900.

Organizations should follow dynamic or flexible strategies rather than becoming static and try to

address all conditions using only one generic strategy. For example if you consider integration

strategies at some level of the industry life cycle licensing or joint venture may be appropriate but

in some other phases it may be appropriate for companies to follow highest level of integrations

like vertical or horizontal integrations, merger and/or acquisition.

47
This paper discuss that the international marketing plan of a French manufacturers launching its

electric/hybrid cars in the U.S market. Based on the detailed analysis in this paper it will be

strategically and financially sound for a French electric/hybrid car manufacturer to consider to

internationalize its products using a Joint Venture so as to accomplish its marketing plan. In

addition to this the paper addresses one possible avenue for a French EV/HEV makers as mass

marketing initiative of the company to penetrate the U.S. market. Similarly, forming a Joint

Venture with American car manufacturer will help the firm also to gain additional revenue and

synergies that will contribute to the long term success of a French EV/HEV core mission of

manufacturing and selling industry leading electric vehicles.

Considering the advantage of partnership with an American car manufacturer, a French EV/HEV

manufacturer products should be perceived as qualitative, affordable and innovative in terms of

electric technology. Concerning, the pricing strategy, a French EV/HEV manufacturers should

adapt an alignment strategy in order to be competitive and remain accessible. With regard to

promotion, the marketing and communication plays a decisive role in the United States and the

expertise and knowledge of the American firm will help the French company to penetrate the U.S.

market.

When we look at the place of distribution, as well as the selling process, marketing research should

be combined with national expertise to allow a French electric/hybrid car manufacturer to set the

right distribution and selling strategy.

10.2 Recommendations

Among several electric car manufacturers in France, I choose Renault Zoe to internationalize its

products using a Joint Venture entry modes to opens its doors to the other international

48
perspectives, leading to brighter opportunities. Accordingly, based on the analysis of this paper

the following recommendations are forwarded:-

 The joint venture will be formulated between two companies as a separate strategic

business unit that will be evaluated by its bottom line of profitability, economic value added

among others in addition to the contribution of the joint venture to the strategic objectives

of the two companies that form the JV.

 Before entering in the details of the marketing plan, French electric manufacturer, Renault

Zoe require regular feedbacks and set up monitoring in order to keep a maximum of control

over its international marketing strategy. Indeed, the constant following of the activity and

the regular updates are mandatory for this type of internationalization.

 A Joint Venture of Renault Zoe and an American auto manufacturer must implement

promotional campaign to further introduce its brand performance and advantages of

electric vehicle.

 It is highly recommended to expand after sales service and repair infrastructure based on

the sales volume to different part of U.S.

 The JV should enhance its strategic partnership that ensure to get the top rank in the EV

industry and achieve sustainable competitive advantage from its superior battery

technology and product design by introducing cost effective EVs for middle class

customers.

 It is highly advised to capitalize on its innovative corporate culture and strong R&D

capabilities to reduce charging time for batteries and to increase the range that their EVs

can go in a single charge.

49
  The JV should expand its production capacity in order to cater the future expected high

demand by increasing its financial base both through sell of equities and debt financing.

 Renault Zoe should try to minimize possible supplier problems to accommodate the future

expected significant increase in demand through backward integration.

 Through the application of conducive human resource management like the introduction

of well organized knowledge management it should try to attract knowledge workers from

different parts of the world.

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Annex-I The demand of global Electric Vehicle in 2011 and 201
Source: (iea.org, 2013)

53
Annex-II Market Share of Hybrid and pure Electric Car volume in 2009 and projective 2020

Source: JD Power (Dolcera (website). Electric Vehicles Market., n.d.)

54
Annex-III The Market of Electric Cars in US

Source: Electric Drive Transportation Association (as cited in Dolcera (website). Electric
Vehicles Market., n.d.)

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Annex-IV Electric vehicles penetrate different cities

Source: Electric Drive Transportation Association (as cited in Dolcera (website). Electric
Vehicles Market., n.d.)

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