Language and Business
International Communication Strategies in Saxon Small and Medium-Sized Companies
©2004
Doktorarbeit / Dissertation
381 Seiten
Zusammenfassung
Inhaltsangabe:Abstract:
Small and medium-sized enterprises (SMEs) are the backbone of the German economy. Against the background of continuing globalisation, they are increasingly faced with the challenge of internationalisation. This study was designed as an empirical investigation of how well SMEs in the federal state of Saxony are prepared for this task of the future, which measures they take in order to market their products and services in the global marketplace, and it tries to identify their strengths and weaknesses in this respect. The very nature of this thesis is thus a truly interdisciplinary approach, investigating marketing aspects as well as linguistic factors.
The main focus was on the language small and medium-sized companies use for their international communications. English has long become the lingua franca of the globalising economy, and this study set out to investigate how well SMEs are prepared to meet the linguistic requirements imposed on them by global business. Enterprises in the new German states are widely believed to be disadvantaged with regard to their communicative competence in English, since English played only a minor role for decades, but has risen to decisive significance within the past couple of years, taking many companies and their employees by surprise, finding them not as well prepared as their colleagues in the old German states.
Still, finding their way to the new export markets in Western Europe, the Americas and Asia are vital for the survival of Saxon economy, and communicative competence in English as the lingua franca of international business is the major prerequisite for achieving this objective. Corporate communicative competence involves various aspects, including the foreign language skills of the employees covering the entire range of linguistic skills from oral communication including listening and speaking, giving presentations or participating in negotiations to writing skills ranging from reading and writing of various text types, including media literacy.
Apart from the personal linguistic competence of the employees, the corporate linguistic competence of the company also plays a major role for the perception of the company on its international markets. Therefore this study focused on investigating how well SMEs present themselves in their corporate literature and on the internet, which instruments from the wide-ranging selection of marketing tools hey apply for communicating […]
Small and medium-sized enterprises (SMEs) are the backbone of the German economy. Against the background of continuing globalisation, they are increasingly faced with the challenge of internationalisation. This study was designed as an empirical investigation of how well SMEs in the federal state of Saxony are prepared for this task of the future, which measures they take in order to market their products and services in the global marketplace, and it tries to identify their strengths and weaknesses in this respect. The very nature of this thesis is thus a truly interdisciplinary approach, investigating marketing aspects as well as linguistic factors.
The main focus was on the language small and medium-sized companies use for their international communications. English has long become the lingua franca of the globalising economy, and this study set out to investigate how well SMEs are prepared to meet the linguistic requirements imposed on them by global business. Enterprises in the new German states are widely believed to be disadvantaged with regard to their communicative competence in English, since English played only a minor role for decades, but has risen to decisive significance within the past couple of years, taking many companies and their employees by surprise, finding them not as well prepared as their colleagues in the old German states.
Still, finding their way to the new export markets in Western Europe, the Americas and Asia are vital for the survival of Saxon economy, and communicative competence in English as the lingua franca of international business is the major prerequisite for achieving this objective. Corporate communicative competence involves various aspects, including the foreign language skills of the employees covering the entire range of linguistic skills from oral communication including listening and speaking, giving presentations or participating in negotiations to writing skills ranging from reading and writing of various text types, including media literacy.
Apart from the personal linguistic competence of the employees, the corporate linguistic competence of the company also plays a major role for the perception of the company on its international markets. Therefore this study focused on investigating how well SMEs present themselves in their corporate literature and on the internet, which instruments from the wide-ranging selection of marketing tools hey apply for communicating […]
Leseprobe
Inhaltsverzeichnis
ID 8161
Sternkopf, Sylvia-Michèle: Language and Business - International Communication Strategies
in Saxon Small and Medium-Sized Companies
Hamburg: Diplomica GmbH, 2004
Zugl.: Technische Universität Chemnitz, Dissertation / Doktorarbeit, 2004
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Diplomica GmbH
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Printed in Germany
2
Table of Contents
1.
Scope
and
Objectives
9
1.1. Objectives of this thesis
9
1.2. Methodology
11
1.3. Structure of this thesis
13
PART I DISCOURSE ANALYSIS OF MARKETING COMMUNICATIONS
15
2.
Profile of participating companies
16
2.1. "Mittelstand"
in
Germany
16
2.2. The selection of the sample
17
2.2.1. The region of South West Saxony
17
2.2.2. The selection process
18
2.2.3. Definition by sector
20
2.2.4. Definition by size
21
2.2.5. Definition by year of foundation
22
2.2.6. Definition by headquarter
22
2.2.7. Definition by export activities
22
2.2.7.1.
Internationalisation process
22
2.2.7.2.
Export
rates
23
2.2.7.3.
Development of export rates
24
2.2.7.4.
Export and import countries
25
2.2.7.4.1.
Export
countries
25
2.2.7.4.2.
Import
countries
27
3.
Globalisation and Marketing Strategies
28
3.1. Benefits and threats of a globalising economy
28
3.2. The marketing mix as the foundation of global marketing
30
3.2.1.
Product
32
3.2.1.1.
Product
portfolio
32
3.2.1.2.
Product
appearance
32
3.2.1.3.
Pre- and after-sales service, planning, training, assembly 33
3.2.2.
Price
34
3.2.3.
Distribution
35
3.2.4.
Communication
36
3.3. Planning and cooperation
37
3.3.1. Professional planning
37
3
3.3.2.
Institutional
partners
40
3.3.2.1.
Bfai (Federal Agency for Foreign Trade)
41
3.3.2.2.
IHK
42
3.3.2.3.
AHK
42
3.3.3. Private service providers
44
4.
International Communications and English as a Lingua Franca
46
4.1. The significance of English as a lingua franca
46
4.2. English in everyday business
50
4.3. Responsibilities for English language tasks
52
4.3.1.
Translation
tasks
52
4.3.1.1.
Linguistic background of translation
52
4.3.1.2.
Translation practice in SMEs
54
4.3.1.3.
Bridging the gap between content and style
62
4.3.2.
International
contracts
64
4.3.3.
Negotiations
64
4.3.4. Looking after international guests
65
4.3.5.
International
trade
fairs
66
4.3.6.
Presentations
66
4.3.7. Business correspondence and telephoning
66
4.3.8.
Media
relations
67
4.3.9. English version of the internet presentation
67
4.3.10.
Summary
responsibilities
68
4.4. Command of English of employees and executives in Saxon SMEs
70
4.4.1. Command of English of the people in charge of international
communication
tasks
70
4.4.2. The "English-Gap" between East and West Germany
71
4.4.3. A positive outlook
72
4.4.4. English language training in SMEs
73
4.4.4.1.
Language training as part of the personnel development
strategy
74
4.4.4.2.
Analysis of the current situation
75
4.4.4.3.
Definition
of
goals
75
4.4.4.4.
Solutions
78
5.
Marketing and advertising
80
5.1. Marketing as discourse
80
4
5.2. The significance of marketing instruments in SMEs
82
5.2.1.
Trade
fairs
83
5.2.2.
Direct
marketing
84
5.2.3.
Media
relations
85
5.2.4.
Sales
agents
86
5.2.5. Print advertising and online promotion
87
5.2.6. PR and events
88
5.3. National and international marketing spending
90
5.3.1.
General
results
90
5.3.2. Exact spending on individual marketing tools
94
5.3.2.1.
Trade
fairs
94
5.3.2.2.
Sales
literature
95
5.3.2.3.
Internet
96
5.3.2.4.
Print advertisements and media relations
98
6.
Trade
Fairs 100
6.1. Importance of trade fairs for Saxon SMEs
100
6.2. Benefits
of
trade
fairs 101
6.3. Cost
factors
103
6.4. Common flaws in trade show presentations
104
6.5. Effective use of trade fairs as a platform of communication
106
6.5.1.
Preparation
106
6.5.2. Presentation at the stand
108
6.5.3.
After
the
fair
115
6.6. Domestic vs. international trade fairs
118
7.
Advertising and Sales Literature in Saxon SMEs
121
7.1. Function of sales literature
121
7.2. Types of sales material in SMEs
122
7.3. International
sales
literature
127
7.4. Intercultural
adaptation
128
7.4.1. Awareness of intercultural differences
128
7.4.2. Guidelines for intercultural adaptation
130
7.4.3. Intercultural adaptation of concept and style
133
7.4.4. Adaptation of product names
134
7.4.5. Visual adaptation: symbols and colours
136
7.5. Summary
138
5
8.
Internet
and
Online-Promotion
139
8.1. Theoretical and linguistic background
139
8.1.1. The Internet as the communication tool of the future
139
8.1.2. The language of the internet
141
8.1.2.1.
General
observations
141
8.1.2.2.
Structure and navigation
144
8.1.2.3.
Style
and
readability
146
8.1.2.4.
User-friendliness
148
8.1.2.5.
Scannability
150
8.1.2.6.
Conciseness
151
8.1.2.7.
Objectivity
151
8.1.2.8.
Credibility
151
8.1.2.9.
Graphics
153
8.2. Practical analysis: international online marketing in Saxon SMEs
156
8.2.1.
Online
marketing
strategy
156
8.2.1.1.
Retrievability
157
8.2.1.2.
Areas of use of the world wide web
162
8.2.1.3.
Keeping the website up to date
163
8.2.1.4.
E-commerce and online shops
164
8.2.1.5.
E-Mail
campaigns
167
8.2.1.6.
Linguistic
localisation
169
8.2.1.7.
Cultural
adaptation
173
9.
Media
Relations
177
9.1. Building successful relations with the media
177
9.2. International
media
relations
181
9.3. Guidelines for successful media relations
182
9.3.1.
The
media
database
182
9.3.2. The text type 'press information'
183
9.3.3.
The
right
perspective
185
9.3.4.
The
right
manner
188
9.3.5.
The
press
kit
190
9.4. Benefits of professional media work
191
6
PART II SEMIOTIC AND LINGUISTIC ANALYSIS OF PROMOTIONAL
LITERATURE
10.
Functional Analysis of Advertising
194
10.1.
Conveying
information 194
10.2.
Motivating the customer to buy
196
10.3.
Reinforcing the decision to buy
199
10.4.
Socialising
199
10.5.
Entertaining
199
10.6.
Strategies to achieve the communication objectives
200
11.
Linguistic and Semiotic Analysis of Advertising
204
11.1.
Linguistic features of the language of advertising
204
11.1.1. Functions of advertising language
204
11.1.2. Functional and practical stylistics of advertising language
210
11.1.3. Lexical features of advertising language
211
11.1.4. Grammatical and syntactic features of advertising language
215
11.1.4.1.
Syntactic
features
215
11.1.4.2.
Spelling 217
11.1.5. Ambiguity in advertising language
220
11.1.5.1.
Semantic ambiguity and puns
220
11.1.5.2.
Syntactic
ambiguity
225
11.1.5.3.
Ambiguity
of
reference 225
11.1.6. A Pragmatic approach to the language of advertising
226
11.1.7. An illustrative linguistic analysis of headlines
227
11.1.7.1.
Stylistic features of headlines
228
11.1.7.2.
Linguistic peculiarities of headlines
229
11.2.
A semiotic analysis of visual communication in advertising
235
11.2.1. Functions and visual rhetoric
235
11.2.2. Types of visualisation 238
11.2.3.
Other
visual
elements 241
11.2.3.1.
Corporate
Design
241
11.2.3.2.
Colours 242
11.2.3.3.
Fonts
244
12.
A Linguistic Analysis of International Sales Literature in Saxon SME's
246
12.1.
Evaluation
of
samples 246
12.2.
Qualitative
sample
analysis
253
7
12.3.
Analysis of individual criteria
262
12.3.1.
Perspective
262
12.3.2. Use of pronouns / referents
265
12.3.3.
The
title 266
12.3.4.
The
headline
concept 267
12.3.5.
Subheads
and
captions
268
12.3.6.
The
slogan
268
12.3.7.
Stylistic
devices
269
12.3.8.
Syntax
270
12.3.9.
Register
271
12.3.10. Spelling
and
grammar 273
12.3.10.1.
Spelling and punctuation
273
12.3.10.2.
Grammar
275
12.3.11. Conventions
275
12.3.12. Interference
276
12.3.12.1.
Lexical
interference
276
12.3.12.2.
Syntactic
interference
278
12.3.13.
Visual appearance, scannability, use of photos
279
12.4.
Summary
281
PART III MERGING RESULTS
13.
Conclusion: International Communication in Saxon SMEs and the Functions of a
Communications
Consultant
284
13.1.
Management of international communication tasks in Saxon SMEs
285
13.2.
Areas of improvement from the companies' perspective
287
13.3.
Comparison with the communicative needs defined in this study 288
13.4.
The concept of a "resource" or communications consultant
289
13.5.
Executive
summary
296
Zusammenfassung der Arbeit auf Deutsch
297
Appendices
Appendix I:
Blank questionnaire used as a basis of the empirical
investigation
309
Appendix II:
Questionnaire with results
316
Appendix III:
Linguistic analysis of 24 sample brochures
232
8
Bibliography
354
List
of
Abbreviations 378
9
1. Scope and Objectives
1.1. Objectives of this thesis
Small and medium-sized enterprises (SMEs) are the backbone of the German
economy. Against the background of continuing globalisation, they are increasingly
faced with the challenge of internationalisation. This study was designed as an
empirical investigation of how well SMEs in the federal state of Saxony are prepared
for this task of the future, which measures they take in order to market their products
and services in the global marketplace, and it tries to identify their strengths and
weaknesses in this respect. The very nature of this thesis is thus a truly
interdisciplinary approach, investigating marketing aspects as well as linguistic
factors.
The main focus was on the language small and medium-sized companies use for
their international communications. English has long become the lingua franca of the
globalising economy, and this study set out to investigate how well SMEs are
prepared to meet the linguistic requirements imposed on them by global business.
Enterprises in the new German states are widely believed to be disadvantaged with
regard to their communicative competence in English, since English played only a
minor role for decades, but has risen to decisive significance within the past couple
of years, taking many companies and their employees by surprise, finding them not
as well prepared as their colleagues in the old German states.
Still, finding their way to the new export markets in Western Europe, the Americas
and Asia is vital for the survival of Saxon economy, and communicative competence
in English as the lingua franca of international business is the major prerequisite for
achieving this objective. Corporate communicative competence involves various
aspects, including the foreign language skills of the employees covering the entire
range of linguistic skills from oral communication including listening and speaking,
giving presentations or participating in negotiations to writing skills ranging from
reading and writing of various text types, including media literacy.
Apart from the personal linguistic competence of the employees, the "corporate"
linguistic competence of the company also plays a major role for the perception of
the company on its international markets. Therefore this study focused on
investigating how well SMEs present themselves in their corporate literature and on
the internet, which instruments from the wide-ranging selection of marketing tools
10
they apply for communicating with international markets and how the linguistic
quality of their international market communications can be assessed.
The objective is to provide small and medium-sized companies with a tool to
maximise the effects of their international communication efforts based on the
analysis of the current state of the art and on the evaluation of previous studies in
this field. Theories from the field of functional stylistics provide a useful scope for
such an approach. Although the aim of this study is not to establish normative
requirements with regard to how corporate advertising literature
should be
written, a
functional style analysis will provide the basis for suggestions of what
could be
improved with regard to the functions these text types have to fulfil. These
suggestions will be based on a comparison of the established features of the text
type of advertising copy
1
with the linguistic features actually used by Saxon SMEs in
their marketing materials
2
.
It is suggested that the implementation of the concept of the communications
consultant will be one efficient way to improve international communication
management in small and medium-sized companies. By analysing communicative
tasks in SMEs and by providing a theoretical background, the concept of the
communications consultant will be put on a scientific basis, and the need for
professional support in international communications for SMEs will be underlined.
The idea of the communications consultant actually sparked this entire study. After
reading Zeh-Glöckler's study on
English in Saxony
and contemplating the concept of
the
Sprachenberater
she suggested, I compared her findings with my practical
experience from everyday communications in Saxon SMEs and developed the idea
that the concept of the
language consultant
might be put on an even wider footing,
serving as a true
communications consultant.
The major difference between these
two concepts is that the communications consultant has a stronger focus on
marketing, taking responsibility for all aspects of international marketing
communications. Therefore I designed a questionnaire dealing with a great variety
of factors influencing and determining the international marketing strategy of a
company and then linked the results to linguistic theories in an interdisciplinary
approach. The actual feasibility and possible ways of implementing the concept of a
communications consultant will be discussed in the final chapter of this thesis, taking
the findings from the questionnaire and the linguistic analysis into account.
1
Cf. chapter 11.
2
Cf. chapter 12.
11
1.2. Methodology
The empirical study is based on a questionnaire containing nine question sets,
comprising the communicative fields of advertising and sales literature, press work,
e-commerce and internet presentations, the participation in trade fairs as well as
language training and intercultural aspects.
The final version of the questionnaire was preceded by two pre-tests with a total of
35 participants in two rounds. These were the objectives of this step:
1)
To test the understandability of the questions and to find out if they
indeed elicit the required answers.
2)
To test how much time is consumed by filling in the questionnaire. I
asked all testees to indicate the amount of time it took them to fill in the
form. This was necessary in order to be able to inform the potential
participants of the real test about how long they are going to take. On the
one hand, this served the principle of honest information, on the other
hand it helped avoid manipulated answers due to allowing the
participants to think it over and over again.
3)
To get feedback on the organisation of the test, its layout and its visual
appearance.
4)
To eliminate unnecessary or superfluous questions and to discover which
questions were mostly left unanswered. In those cases, the questions
needed modifying.
5)
To get a first impression of what the answers are going to be and then to
decide whether or not to include additional or clarifying questions.
In order to implement the pre-tests, I distributed the form among 15 managing
directors or sales managers who I am personally acquainted with. This allowed me
to expect a high response rate as well as honest and personal comments, remarks,
ideas, suggestions and above all, constructive criticism.
Apart from having the test filled in by the "real" target group, i.e. managing directors
or sales managers, I also had the questionnaire checked by several experts in
marketing, international trade and intercultural communication from several
universities (including the universities of Jena and Dresden) and business
organisations (including the Wirtschaftssenioren, IHK Chemnitz and CWE
Chemnitzer Wirtschaftsförderungs- und Entwicklungsgesellschaft).
12
The final and approved version of the questionnaire
3
was then sent out to a total of
741 companies
4
. Out of these 741 SMEs, 108 companies returned the completed
questionnaire. This equals a response rate of 14.6%
5
. The results of the
questionnaire were evaluated with the help of the statistics programme SPSS.
Furthermore, the investigation was completed by more than 50 intensive interviews
with senior executives of Saxon companies, representatives of the Chamber of
Industry and Commerce, business journalists and scholars. There was no particular
guideline or questionnaire for the intensive interviews, because they were conducted
against the background of the questionnaire which was used for the empirical study
and the results given by that particular company (for those interviewees who had
participated in the written investigation and who had given their permission to
evaluate the results on a personalised basis). In the interviews, certain points of
interest from the questionnaire were topicalised and explored in greater depth,
elaborating on reasons, backgrounds and opinions leading to the results given in the
written investigation. Thus, the intensive interviews mainly served to deepen the
understanding of the results of the questionnaire, providing the researcher with
valuable insights into everyday practice and background information.
Apart from that, the author of this study has been working as a professional
translator, advertising copywriter, English language trainer and intercultural coach
for more than eight years at the time of completion of this study and can thus
contribute valuable insights and experience from the communication practice in
Saxon SMEs.
All in all, this study represents a comprehensive picture of the state of international
communication in Saxon SMEs and tries to pave the way for its further improvement
by providing an analysis of the current state and a guideline for future success.
3
See Appendix.
4
For further details on the selection of the sample see chapter 2.2.
5
When planning this survey, I had aimed at achieving a response rate of 7%, which is a good average
for studies of this kind. That I achieved more than twice as many was a great success, which I mainly
trace back to the fact that as a gesture of saying thank you, I offered a free intercultural seminar to all
participants in this survey. More than 50 companies registered for this seminar, and 38 actually took
part.
13
1.3. Structure of this thesis
In order to provide a broader understanding of texts and contexts of marketing
communications and the language it uses, this thesis is divided into two analytic
parts which are merged in part three in order to reach a conclusion. Rather than
observing and describing language as an isolated entity, discourse analysis aims at
paying tribute to the entire range of determinants influencing a certain text type.
"The breadth of this approach is justified by the belief that neither specific acts of
communication nor the internal mechanisms of language can be well understood in
any other way. (...) Discourse analysis views language and context holistically."
6
Cook defines the term
discourse analysis
as follows: "Discourse is text and context
together, interacting in a way which is perceived as meaningful and unified by the
participants (...). The task of discourse analysis is to describe both this phenomenon
in general and particular instances of it."
7
And he continues: "The study of language
must always take context into account, because language is always in context, and
there are no acts of communication without participants, intertexts, situations,
paralanguage and substance."
8
Part 1 builds on the belief that marketing communications can be considered a
special discourse type determined by external factors and a specific context, which
again influences the type of language used in that particular discourse type.
Discourse determines style. In part 2, I am going to describe the major determinants
of marketing discourse, based on a
quantitative
, empirical investigation into the
context of marketing communications. Chapter 2 outlines the profile of the
participating companies that formed the sample of the empirical study. Chapter 3
investigates the process of globalisation and the consequences this has on the
marketing mix of SMEs, focussing on communicative aspects. Starting from the
assumption that English as the lingua franca is one of the most vital prerequisites of
successful marketing communications in a globalising economy, chapter 4 sheds
light on various English language skills in Saxon SMEs. Chapter 5 provides a
quantitative analysis of the application of marketing instruments in Saxon SMEs,
illuminating the communicative aspects of trade shows, sales literature, the internet
and media relations. In the following chapters, these factors are explored in greater
6
Cook, G.,
Discourse of Advertising
(London: Routledge 1992), p. 1.
7
Cook also holds that "discourse analysis is sometimes accused of being large and rather messy, for it
cannot bring to analysis the precision of approaches which isolate one facet of communication from
others." (ibid, p. 1) an accuse which could be turned against this paper as well. However, taking such
an approach means that this lack of precision is the price one has to pay if one wants to get a broader
picture.
8
Ibid, p. 2.
14
depth and detail, focussing on the various aspects of international communications.
Chapter 6 deals with trade fairs; sales literature is analysed in chapter 7; the internet
in chapter 8 and last but not least media relations are illuminated in chapter 9.
Part 2 presents a
qualitative
analysis and focuses on the language resulting from
the particular text types of marketing discourse, taking the approach of functional
and descriptive stylistics. In a way, normative or practical stylistics is also going to
play a role, since there will be a comparison of how the promotional language used
by SMEs in Saxony relates to the linguistic "standard" or "norm" of that particular
text type. One obstacle that needs to be overcome here is the fact that most
analyses of advertising language that have been made to date mainly focus on the
language of print adverts. As this sub-category bears only little relevance for the
participants in this study, I decided to ground the linguistic analysis on their
marketing literature, i.e. their brochures. Although there are a few differences
between adverts and brochures with regard to structure or use of pictures, the basic
linguistic features are very similar. Chapter 10 explores the functional background of
advertising in general with regard to its role in the marketing mix and for promoting
the products and services of a company. Chapter 11 illuminates how the language
of advertising serves these functions and which peculiarities derive from the
functional requirements of advertising with regard to its language. Chapter 12, then,
takes the practical perspective and provides a qualitative analysis of 24 sample
brochures from Saxon SMEs, investigating in how far they meet the linguistic
requirements of advertising language and tries to identify areas of improvement.
Finally, part 3 merges the quantitative results from part 1 with the qualitative results
from part 2 and derives conclusions and recommendations for the communication
practice in SMEs.
Fig. 1.1. Structure of this thesis
Part I:
Discourse
Analysis of
Marketing
Communications
(quantitative
analysis)
Chapters 3-9
Part II:
Semiotic and
Linguistic
Analysis of
Promotional
Literature
(qualitative
analysis)
Chapters 10-12
Part III:
Merging Results
(practical
recommendations)
Chapter 13
15
PART I
DISCOURSE ANALYSIS
OF MARKETING COMMUNICATIONS
16
2. Profile of participating companies
This chapter describes the sample that formed the basis of the empirical study,
which will be subjected to a quantitative analysis in part 1. Keeping in mind the
objective of this paper to provide an analysis of international communication
strategies in small and medium-sized companies I will first outline the
characteristics of so-called SMEs (or "Mittelstand") in general, followed by a
description of the participating companies with regard to sector, size, age, location
as well as their export and import activities, which provide the background for their
international communication activities.
2.1. "Mittelstand" in Germany
German economy is predominated by small and medium-sized companies. About
85% of all companies count among the category "small and medium-sized". In
concrete figures, that means: there are 1.1 million medium-sized companies in
Germany with a minimum level of sales of 125,000 Euro per year and a maximum of
500 employees
9
.
According to the "MIND" study, "Mittelstand in Deutschland", issued by the Dresdner
Bank in 2002, 43.3% of medium-sized companies are from the service sector, which
means a growth of 0.9% compared to 1999. A quarter of small and medium-sized
companies belong to the crafts sector, and about 20% are involved in trade. Both
categories have been declining over the past years. About 10% of small and
medium-sized companies belong to the industrial sector.
Small companies dominate the medium-sized economy. About 60% of the 1.1
million companies employ less than 10 people. In East Germany, medium-sized
companies are still under-represented. This becomes obvious from the fact that only
14.5% of medium-sized companies are based in the new German states (except
Berlin), while 18.5% of the population live there
10
.
Asked for their prospects of the future, East German entrepreneurs are significantly
less optimistic than their colleagues in the West. Whereas 32% of West German
entrepreneurs expect an improvement of their economic situation during the next
9
Dresdner Bank AG,
Mind 02 Mittelstand in Deutschland
(Köln: Gruner + Jahr Wirtschaftspresse
2001).
10
Ibid.
17
months, this figure is 10% lower in the East. But East German companies are
determined to move forward: The percentage of companies that plan to invest in the
qualification of their staff is considerably higher than in West Germany, and they
generally plan to invest more in marketing and advertising.
11
This is vitally necessary if East German companies want to succeed in a global
marketplace. However, many of them have inhibitions about setting foot on
international markets: "Kooperationen suchen die Ost-Unternehmer vor allem
innerhalb Deutschlands: Der Anteil von Firmen, die vor allem mit inländischen
Unternehmen kooperieren wollen, ist in den fünf neuen Bundesländern deutlich
höher als im Westen."
12
This investigation focuses on the activities of East German small and medium-sized
companies involved in international business. The objective of this study is to
determine the actual situation of how SMEs market their products abroad, focusing
on the communication process. The study is based on an empirical survey that was
conducted at the end of 2001 among 103 small and medium-sized companies from
the region of South West Saxony.
2.2. The selection of the sample
2.2.1.The region of South West Saxony
South West Saxony is the economic motor of the federal state,
13
confirmed the then
chief administrator of the regional council of Chemnitz Karl Noltze in January 2001,
when this investigation commenced. The region is responsible for 60 percent of
Saxon exports. Thus, South West Saxony can be considered the region in the new
German states that has realised the greatest process in internationalisation.
11
Dresdner Bank AG,
Mind 02 Mittelstand in Deutschland
(Köln: Gruner + Jahr Wirtschaftspresse
2001).
12
Ibid.
13
FP Spezial, "Wirtschaft der Region", 17.2.2001, p. 1.
18
2.2.2. The selection process
The companies to be involved in the survey were chosen according to the following
criteria:
The most important and decisive criterion were the export countries of the
companies. In the IHK address database, more than 70,000 companies were listed
at the time when the survey was planned (2
nd
quarter of 2001)
14
.
Out of those, I eliminated the trades that are very unlikely to pursue trade relations
abroad, i.e. industries with a very clear regional or local focus such as agriculture,
hunting, fishing, mining, printing, suppliers of water and energy, local car dealers,
local retail trade, insurances, lessors, training and education, health services,
governmental services, waste disposal, churches and religious organisations.
I was thus left with the industries listed below to be potential partners for my survey:
Food industry (13.7%), textile and clothing industry (7.7%), wood industry, paper
industry, chemical industry, production of rubber and synthetics, glass and pottery,
metal industry (14.6%), mechanical engineering (17.2%), production of office
equipment and electrical devices (11.1%), radio and TV technology, medical and
optical industry, automotive industry and its suppliers, vehicle industry, production of
furniture, jewellery, musical instruments, toys and sports equipment, recycling
(6.3%), wholesale, data processing, research and development, industry-related
services, culture and entertainment
15
.
With regard to the economic structure in the Chemnitz region, the underlined
industries are particularly relevant. The number in brackets indicates the percentage
relating to the total number of companies in 1999
16
.
Of course, by far not all of the companies falling into these categories have
international trade relations. Therefore I performed a detailed research focusing on
which companies export to the following countries: Egypt, Australia, Belgium, Brazil,
China, Czech Republic, Denmark, Finland, Great Britain, India, Ireland, Italy, Japan,
Mexico, The Middle East, New Zealand, Poland, Portugal, Russia, Sweden, Spain,
South Africa, Taiwan, USA.
14
The current figure of 12/04/01 was 77,268 companies.
15
These industries correspond with the following main groups distinguished by the IHK:
15 (153, 154, 157, 158, 159); 17, 18, 19, 20, 21, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37,
51, 64, 72, 73, 74, 92.
16
Source: CWE 2000, p.18.
19
The choice of Australia, Great Britain, Ireland, New Zealand, South Africa and the
USA is self-explanatory against the background of this study, since English is
spoken as the native language in those countries. The correct and proficient use of
English is therefore of particular importance there. Especially advertising materials
must hit the nerves of the recipients exactly and must therefore put a particular
premium on slight shades of meaning, associations, style, wordplay and the creative
use of the English language in order to be able to compete against the
advertisements of local enterprises. It still has to be discussed whether those
linguistic subtleties are of lower importance in countries where English is only
spoken as a lingua franca, or if the overly creative use of English would perhaps
even hinder the transportation of the advertising message in countries where
English is not spoken as the native language.
The choice of the other countries that serve as criteria for English as the language of
business communication partly goes back to Zeh-Glöckler. In her study completed in
1999, she had included the question: "Mit welchen Ländern stehen Sie vorwiegend
in Kontakt auf Englisch?"
17
Apart from the explicitly English-speaking countries,
which all score between 55-60%, the most frequent answers were: EU member
states (65.3%), East-Asia (36.7%), other Asian countries (33.3%) and, surprisingly,
East-European states such as Russia (43.3%) and the Czech Republic (36.7%).
Zeh-Glöckler states that although the older generation still uses German or Russian
for communication with Eastern European markets (which all people who underwent
schooling in the GDR period had to learn as a compulsory subject), these languages
are being replaced by English as the younger generation is taking over.
18
The other export countries included as criteria for the use of English are the ones
that are deemed relevant for the South-Saxon region by the CWE GmbH, a service
company ascertaining and publishing economic data for the Chemnitz region. So,
out of the 107 possible export countries (including, for example, such exotic
countries as Oman, Sudan or Singapore
19
) listed by the Federal Office for Statistics,
companies in and around Chemnitz mainly maintain trade relations to 36 countries,
17
Zeh-Glöckler, M.,
Erfolgreich mit Englisch? Untersuchungen zum englischen Sprachgebrauch in
sächsischen Unternehmen
(Frankfurt / Main: Lang 2000)., p.193.
18
Ibid, p. 46f.
19
See Federal Office for Statistics, alphabetical list of countries.
20
out of which English is the major language of communication with the ones
mentioned above.
20
In sum, the choice which out of the 77,268 companies in South West Saxony are
relevant for this study followed these steps: First, the range was narrowed down by
picking the industries which are most likely to lead to international trade relations.
Among those, we researched which companies have business contact to those
countries to which communication is mainly held in English. As a result, we were left
with a sample of 741 companies. They were all sent a questionnaire
21
containing 9
question sets. Out of these 741 SMEs, 108 companies returned the completed
questionnaire. This equals a response rate of 14.6%
22
. Five replies could not be
used for the analysis, mainly due to the reply that the company no longer exists. In
total, this leaves 103 completed questionnaires that could be used as a basis for
evaluation. The following section provides an analysis of the profile of the
participating companies.
2.2.3. Definition by sector
80 percent of the companies in this sample are from the industry sector, 20% are
service providers.
In detail, the following categorisation describes the fields of business activities the
companies in this sample are involved in:
Industry
Number
of
companies
Textile
industry 13
Metal
working
12
Mechanical
engineering
11
Electronics
/
electrics
10
Automotive industry and suppliers
7
Wood industry, toys, music instruments
7
Service
providers
7
Environmental technologies, life sciences
7
20
Chemnitzer Wirtschaftsförderungs-und Entwicklungsgesellschaft,
Chemnitzer Wirtschaft.
Firmenhandbuch 2000
(Chemnitz: CWE 2000), p. 550ff.
21
See Appendix.
22
When planning this survey, I had aimed at achieving a response rate of 7%, which is a good average
for studies of this kind. That I achieved more than twice as many was a great success, which I mainly
trace back to the fact that as a gesture of saying thank you, I offered a free intercultural seminar to all
participants in this survey. More than 50 companies registered for this seminar, and 38 took part in the
end.
21
Chemical industry, synthetics processing
5
Computer / IT / telecommunications
5
Plant
engineering
2
Food
industry
2
Optical
industry
/
glass 2
Measuring
industry
2
Trade
2
Construction
industry
1
Paper
/
packaging
1
Fig. 2.1. Fields of business of the companies in this study
This largely represents the structure of the industry in the region of South West
Saxony
23
. The shares of mechanical engineering, the metal industry, the electric and
electronics industry and the wood, instruments and toy industry are representative;
the food and textile industries are slightly underrepresented in this study, which can
mainly be traced back to the fact that the decisive factor for the selection of
companies for this study was their export rate, and these two industries do not
export as extensively as the other sectors.
2.2.4. Definition by size
Almost three quarters of the companies in this sample (72.2%) employ less than 100
people. However, the share of very small companies with less than 20 employees is
comparatively low
24
, which is likely to be due to the fact that the typical small
companies such as craftsmen and the retail industry were not included in this
sample because the major selection criterion was the export rate. Larger companies
with more than 100 employees make about one quarter of this sample.
23
Cf. section 2.2.2.
24
According to the MIND study quoted above, about 60% of SMEs in Germany employ less than 10
people. In this study, the percentage of companies with less than 20 employees is only 25.7%.
22
Size of companies in this sample
26%
26%
20%
22%
4%
2%
1 to 19
20 to 49
50 to 99
100 to 249
250 to 499
500 or more
Fig. 2.2. Size of companies in the sample of this investigation
2.2.5. Definition by year of foundation
The majority of the companies in this sample (66.3%) were founded after the
political change, i.e. after 1990. 16 companies were younger than 10 years at the
time of investigation. 17.8% of the companies in this sample have more than 50
years of tradition and were founded before World War 2.
2.2.6. Definition by headquarter
Ninety-six out of the 103 companies in this sample are based in Saxony. Only 6
companies have their headquarter in the old German states. Thus, this sample can
be considered truly representative of the young East German economy.
2.2.7. Definition by export activities
2.2.7.1. Internationalisation process
International marketing activities are the major focus of this investigation. Therefore,
the export rate was the decisive factor for the selection of this sample. All
companies in this sample are involved in export activities. However, it needs to be
taken into account that export and internationalisation are processes, and that these
processes can have reached different states:
at a very fundamental level, the move from being a completely domestically
oriented firm to having an awareness of international influences. At this stage
23
no more than a simple tracking of events, or a defensive response to
overseas competition might be relevant.
the movement from being a purely domestic firm to undertaking some
upstream or downstream international activity (i.e. either beginning to source
from abroad or selling to a foreign market would be included in this, as would
the development of informal international linkages or collaborative ventures,
say in R & D).
the decision to contract, maintain or expand the existing level of international
activities in the case of a firm which is already operating on an international
level.
25
2.2.7.2. Export rates
Reckoning with the fact that two thirds of the companies in this sample are fairly
young enterprises and have not had more than ten years of time to develop their
export strategies, it seems reasonable to include also companies whose export rate
is only considerably low. What counted as a criterion for selection was the aspect of
international considerations, an export rate of at least 10% and the intention to
expand the international activities in future.
Percent of annual turnover generated
abroad
43,4
21,2
10,1
8,1
8,1
9
0
10
20
30
40
50
0-10%
10-20% 20-30% 30-40% 40-50%
>50%
Fig. 2.3. Percent of annual turnover generated abroad
43.4% of the companies in this sample have an export rate of 10% or lower. Another
fifth generates between 10 and 20% of their annual turnover abroad. Ten companies
export between 20 and 30%, 8 companies between 30 and 40%, another 8
companies export between 40 and 50%, and 9 companies generate more than half
of their annual revenue abroad.
25
Industrie-und Handelskammer zu Leipzig et al. (ed.),
The International SME
(CD-ROM 2001), p.6.
24
2.2.7.3. Development of export rates
Since 1996, the export rates have steadily increased among Saxon SMEs. The
number of companies with a low export rate (between 0 and 10%) has continuously
decreased from 62 to 43 percent of the companies, whereas the share of companies
that export between 10 and 20 percent of their annual turnover has risen from 11 to
21 percent. The number of companies generating between 20 and more than 50
percent of their annual turnover abroad has also steadily increased.
Development of export rates in percent of the annual turnover
between 1996 and 2000
0
10
20
30
40
50
60
70
0-10%
10-20%
20-30%
30-40%
40-50%
>50%
annual turnover generated abroad in % of
total revenue
num
ber
of com
p
anies
annual turnover abroad 1996
annual turnover abroad 1998
annual turnover abroad 2000
Fig. 2.4. Past development of export rates
How will your export rate develop over the next
years?
2%
33%
58%
7%
decline
remain stable
increase
strongly increase
Fig. 2.5. Future development of export rates
For the future, most companies are optimistic with regard to their export activities.
Only 2 companies predict that their export rate will decline over the next couple of
25
years. One third of the companies in this sample intend to maintain its current export
rate. On the other hand, an amazing percentage of two thirds are planning to
increase their export activities in the future and want to create more sales and
revenue abroad. This study will try to provide advice on how they can achieve that
goal.
2.2.7.4. Export and import countries
2.2.7.4.1. Export countries
The evaluation of export countries was performed according to two different criteria:
1) Frequency, i.e. how many companies from this sample export to these countries
in total and 2) Importance, i.e. which export countries are most important for Saxon
SMEs? The result can be seen in the figures below:
1. Benelux
countries
(29)
2.
USA, incl. Canada
(28)
France
(28)
South-East Asia, incl. China (28)
5.
UK
(26)
Austria
(26)
7. Switzerland
(23)
8
Russia and former USSR
(20).
9. Arabic
countries (19)
10. Scandinavian
countries (17)
11. South
America
(16)
Italy
(16)
13. Czech
Republic
(13)
EU
countries
(13)
15.
Poland
(12)
16.
Japan
(11)
17. Hungary
(6)
18. Portugal
(5)
19. Slovenia
(3)
Australia
(3)
South
Africa
(3)
Fig. 2.6. Export countries after frequency
26
26
The figure in brackets indicates the total number of companies exporting to the respective country,
irrespective of the importance of that export country.
26
1.
USA, incl. Canada
(175)
2.
France
(153)
3.
Austria
(139)
4. Switzerland
(137)
Benelux
countries
(137)
6.
UK
(128)
7.
Russia and former USSR
(116)
8.
South-East Asia, incl. China (84)
9. Arabic
countries (83)
10. South
America
(77)
11. Scandinavian
countries (76)
Italy
(76)
13. EU
countries
(75)
14. Czech
Republic
(65)
15.
Poland
(62)
16.
Japan
(60)
17.
Spain
(39)
18. Hungary
(34)
19. Portugal
(19)
20. Slovenia
(16)
21.
Australia
(12)
22.
South Africa
(9)
Fig. 2.7. Export countries according to importance
27
The results suggest that apart from other German-speaking countries such as
Austria and Switzerland, the Anglophone markets of the USA, Canada and the UK
are the most important export markets for Saxon SMEs, underlining once more the
major importance of excellent English language skills.
27
Each company rated the importance of their export countries on a scale from 1 (least important) to 8
(most important). These rates were added up. The figures in brackets indicate the overall result.
27
2.2.7.4.2. Import countries
However, Saxon SMEs do not only sell their goods on foreign markets, they also
purchase components and materials from other countries. Below is a list with the
most important import countries supplying goods and materials to Saxon SMEs:
1. Czech
Republic
(17)
2.
Italy
(15)
France
(15)
4. Switzerland
(14)
5.
UK
(9)
6.
China and South-East Asia (8)
Austria
(8)
8.
USA
(7)
Benelux countries
(7)
10.
Scandinavian countries
(6)
11.
Poland
(5)
Fig. 2.8. Most important import countries of Saxon SMEs
28
Obviously, Saxon companies purchase from an entirely different set of countries
than those they export to. English-speaking countries such as the USA and the UK,
which take the lead among the export countries of Saxon SMEs, are not as
important as suppliers of resources. Hence, English language skills are not as vital
for purchasing products abroad as they are for selling goods.
So how can Saxon SMEs successfully sell their products and services on a
globalising marketplace? Starting from the analysis of the participating companies in
chapter 2, chapter 3 will explore the reasons and effects of a globalising economy
and illuminate the consequences on the international marketing strategies of SMEs.
28
The figure in brackets indicates the total number of companies in this sample buying from those
countries.
28
3. Globalisation and Marketing Strategies
3.1. Benefits and threats of a globalising economy
Globalisation became a buzzword in the 1990s. Whereas most large companies
consider a multinational strategy the only way to survive in an increasingly
competitive environment, many medium-sized and smaller enterprises still have a
sceptical attitude towards international expansion.
Opponents claim that if globalisation continues, the world market will be dominated
by a handful of multinational companies, which will destroy any healthy competition
and will thus be able to develop into true monopolies dictating prices, products and
strategies. Moreover, they fear that this will happen on the back of developing and
third-world countries, which will be exploited as suppliers of cheap labour and
natural resources, but which will never have a genuine chance to benefit from the
wealth they help create. The gap between the rich industrial nations and the
developing countries would thus grow bigger and bigger, resulting in an
unbridgeable economic divergence.
The economy, on the other hand, ceaselessly stresses the multitude of benefits a
global economy holds in stock. The ultimate objective of the economy is steady
growth. However, the domestic markets of developed nations are largely saturated
in many fields, and the only way to achieve lucrative growth rates is to expand sales
to foreign markets. Moreover, the life cycle of products is becoming shorter and
shorter, and existing capacities can be used to their full extent only if products are
marketed on more than one market. As the costs for developing a product are also
increasing dramatically in many industries (e.g. automotive and chemical industries),
a return on investment can often only be achieved if a certain high number of
products is sold, which cannot be achieved on one single domestic market.
The strategy to sell products on a global scale is facilitated by the converging
tendencies between different countries. Lifestyles, product preferences and
consumer behaviour are becoming increasingly similar, which creates attractive and
numerous markets for a product. The rising living standard of emerging countries
contributes largely to this convergence, as they provide attractive and consumption-
affine markets for products that require a certain level of luxury. The improved
infrastructure of emerging and third-world countries is another factor that puts them
29
increasingly in the focus of global sales strategies. Moreover, foreign markets are
often a valuable source of cost-efficient resources for material, finances and labour.
Politics support the globalisation tendencies of businesses. The formation of the
European Union was the major step in this direction that has been taken during the
past years, and it symbolises the efforts of European countries to unite their
strengths as to become an equal player in the global economy that can face the
competition from the United States and Japan. With about 320 million consumers,
the pan-European market offers an even bigger potential than that of the USA.
Competition also increasingly takes place on a global scale. Even companies that
operate purely on a national level are forced to take global players into account, as
they are omnipresent. Due to their enormous size and selling power, the global
players set the pace for new developments, for prices and trends, and they dictate
the market. Whoever wants to claim a place in this market, and be it only on a
regional level, has to reckon with what the multinationals have to offer.
29
Due to these market requirements, globalisation is becoming an item for medium-
sized and smaller companies as well. During the past years, the export rate of
German companies has constantly been between 30 35%. In many regions, such
as in the region of South West Saxony that provided the basis for this empirical
study, the export rate is significantly higher
30
. But also on the side of the suppliers,
international contacts are a vital prerequisite of successful SMEs.
The benefits of exporting are visualised in the following overview:
Increased sales
Higher profits
Reduction of dependence on traditional markets
Diversified markets
New knowledge, experience and enhanced domestic competitiveness
Global competitiveness
31
Fig. 3.1. Benefits of exporting
29
Kreutzer, R.,
Global Marketing Konzeption eines länderübergreifenden Marketing
(Wiesbaden:
Deutscher Universitäts-Verlag 1990), p. 1-4.
30
60% of exports in Saxony come from this region (FP Spezial, "Wirtschaft der Region", 17.2.2001,
p.1).
31
http://www.glreach.com/eng/intltrade/index.php3.
30
3.2. The marketing mix as the foundation of global marketing
Every company that considers expanding its activities to foreign markets should be
aware that global marketing comprises a wide range of processes and affects all
aspects of the marketing mix. The reduction of an international marketing strategy to
an international advertising strategy, or even worse, to a mere translation of existing
marketing material into the languages of the target countries, fails to reckon with the
complexity of the matter. An international strategy should comprise all processes
within a company, i.e. controlling, human resources, research and development and
product launch strategies, price strategy, purchasing and logistic processes, a global
corporate identity, as well as all the classical elements of the marketing mix. The
marketing mix includes all elements that contribute to the successful sale of a
product or service and comprises considerations of products, prices, sales and
communication
32
.
32
In English and American marketing literature, the four elements are often referred to as "the 4 Ps":
Product, Price, Placement and Promotion.
31
Fig.3.2. Elements of the marketing mix
33
33
Cf. Bundesministerium für Wirtschaft und Technologie (ed.), "Marketing", in:
Gründerzeiten
20
(1999).
MARKETING MIX
Product
Price
Sales
Communi-
cation
Portfolio of
products and
services
Product ap-
peranace
(design,pack-
aging)
Pre- and
after-sales
service,
training,
planning
End
consumer
price
Conditions for
resellers
Conditions for
represen-
tatives
Sales
organisation
Sales
represen-
tatives
Direct sales
Classical
advertising
(for products
or image)
Promotion
activities
Public
relations
Sales agents
Direct
marketing
32
Taking the individual elements of the marketing mix into consideration, the following
questions need analysing if a company intends to offer its products and services on
a global scale
34
:
3.2.1. Product
3.2.1.1. Product portfolio
Is there a demand for this product in the respective markets?
If not, how can a demand be created (e.g. through extensive advertising,
sponsoring, promotional activities)?
What is the lifecycle of the product in the target country?
o
Many companies from Germany underestimate the demands foreign
customers have in terms of quality and standard of the product. In the
intensive interviews accompanying the empirical investigation of this
study, one managing director told the story of his attempt to sell one
of his older models to Egypt. He vastly underestimated the
sophistication of the Egyptian market. The client right-out rejected to
buy such an old-fashioned model.
o
Uwe Hartmann, managing director of Chemnitz-based Ermafa GmbH
points out the high standards demanded by the Russian market: "Wir
stehen dort genauso im Wettbewerb mit der internationalen
Konkurrenz wie auf anderen Plätzen der Welt. In russischen
Unternehmen haben vielfach junge Leute mit internationaler
Ausbildung die ersten Reihen besetzt. Diese erwarten absolutes
Niveau, beginnend bei der Präsentation eines potentiellen
Auftragnehmers."
35
Which competitors are already active in this sector?
What are their activities, their sales figures, their strengths, their challenges?
3.2.1.2. Product appearance
Is the design of the product appealing to the consumers in the target
markets?
What do products of competitors look like?
Can the packing be well handled in terms of shipping, warehousing and
transport in the respective country?
Which package size is preferred by the consumers in the target market?
34
Cf. Kreutzer, R.,
Global Marketing Konzeption eines länderübergreifenden Marketing
(Wiesbaden:
Deutscher Universitäts-Verlag 1990).
35
Uwe Hartmann
,
in
: Freie Presse
, 17.2.2001, p.9.
33
o
Due to the lower economic power of consumers in countries or areas
with a lower purchasing power, many products, including detergents
and cigarettes, are offered in smaller pack sizes. Pack sizes can also
have intercultural implications. For example, a set of golf balls that
came in a pack of four did not sell well in Japan. The reason is that
the figure 4 is an unlucky number in Japan
36
.
Are there official laws or guidelines that need obeying?
o
This is particularly relevant for the declaration of ingredients or safety
precautions, which can differ quite significantly between countries
and which can have serious consequences in terms of product
liability.
Should the packaging be the same in all countries or should it be adapted to
the respective markets?
o
The arguments in favour of a consistent packaging design are
prevailing: First, it helps save production and logistics costs, and
second a coherent packing can support the identification of
consumers with the product. Buyers shall be reassured that they can
find their favourite products no matter where they are. Many tobacco
firms estimate the significance of the packing as high as to maintain
the same pack design even if the blend of the cigarettes contained in
it differs between countries.
37
3.2.1.3. Pre- and after-sales service, planning, training, assembly
Can a warranty for the product be provided on foreign markets?
Who is responsible for the installation and assembly of industrial goods?
o
Not in every case are the employees of the manufacturing company
allowed to actually set up and assemble their product themselves. A
Saxon manufacturer of machine tools was confronted with an US-
American regulation allowing Germans to work there only under
certain conditions. In the case that was reported in the interview, this
regulation led to the situation that the machine had to be set up by
untrained American workers, who took four times as long as their
German colleagues would have taken for the same job. The costs for
this time-consuming assembly had to be borne by the German
manufacturer.
36
Hollet, V.,
Business Objectives
(Oxford: Oxford University Press 1992), p. 55
37
Kreutzer, R.,
Global Marketing Konzeption eines länderübergreifenden Marketing
(Wiesbaden:
Deutscher Universitäts-Verlag 1990), p. 290ff.
34
Who is responsible for maintenance and repair of products?
What are the costs?
o
These challenges are the reason for some of the major problems one
Saxon manufacturer of machine tools is currently facing in connection
with their attempts to export their machining centres to the USA. The
machines are used by suppliers to the automotive industry, who are
bound to very tight deadlines and delivery times. If a machine breaks
down, it has to be repaired as quickly as possible. However, if an
engineer has to fly over from Germany to fix the problem, it can
hardly be resolved within 24 hours, not to mention the immense costs
that this procedure incurs. One possible solution is remote diagnosis
and remote support via telephone and internet. A maintenance
engineer in the German head office has access to the control of the
machine via internet and can try to fix the problem from the distance.
However, the engineers complained in the interview that
communicative barriers often hamper fast and precise action.
Who trains the users of the product?
o
Communication and cultural obstacles are also the reasons for
another challenge that the machine tool manufacturer mentioned
above is facing: Most machine operators in the USA are so poorly
educated that they cause significant damage to the highly sensitive
machining centres. Proper training of the operators is first very
expensive and secondly often aggravated by communication
problems between the (German) instructor and the American
operators.
How can language gaps be overcome?
o
This question applies to oral communication in the case of on-site
maintenance and training, but also to written training and
maintenance material, such as technical documentations, data
sheets, training handbooks and manuals.
3.2.2. Price
What is the purchasing power of consumers in the target market?
What are competitors' prices?
What additional costs occur due to shipping the product to the target market?
What are the costs for appropriate packing, customs, insurance, freight?
35
o
The costs for transporting a machining centre to the USA are about
25,000 Euro. Additionally, a seaworthy packing, which is usually a
specially made wooden box, costs another 5,000 Euro. This adds
about 30,000 Euro to the price of the machine, which greatly reduces
competitiveness in comparison with producers that are based
overseas.
What influence does the currency exchange rate have on the price policy,
and how would possible changes affect price policy?
What are frequently used modes of payment? What bank charges occur?
How do different dimensions and regulations affect the price on a foreign
market?
How important is it to keep the price level consistent over several countries
as not to damage the image of the product?
3.2.3. Distribution
What is the availability and significance of different distribution channels on
the foreign market?
Is qualified personnel available in the foreign country?
What are the preferred distribution channels in the target country?
Is cooperation with business partners possible?
What is the legal background of selling the respective goods in the target
market?
To which extent can e-commerce be used for selling the products in foreign
markets?
o This distribution channel is much too often neglected especially by
medium-sized manufacturers of consumer goods. The internet offers
a wide range of distribution methods for such products, starting from
the company's own internet shop to auctions on eBay or other
auction platforms on the internet. Most companies, however, do not
even consider this channel for selling their products, as a recent
study of the German Ministry of Economy points out: "Die Ergebnisse
einer repräsentativen Betriebsbefragung...zeigen, dass KMU vielfach
keinen Nutzen in e-commerce sehen und mehrheitlich der Meinung
sind, sie seien davon nicht betroffen. Das trifft laut Studie
insbesondere auf deutsche Betriebe zu: Fast 50 Prozent der
deutschen Unternehmen mit bis zu 50 Beschäftigten sehen
beispielsweise keinen Nutzen darin, Online-Bestellungen
36
anzubieten."
38
This result is supported by my study
39
. Here lies a
huge potential for the development of international trade.
3.2.4. Communication
What is the communication concept for the foreign market?
o
The communication concept comprises the communication strategy
as well as its execution.
o
The strategy describes what is communicated to whom and includes
the definition of the target group, the positioning of the company and
its products, the benefits of the product, which should ideally be
reduced to a USP (Unique Selling Proposition), and which should be
explained by reasons why
40
.
o
With regard to the communication mix, Philip Kotler lists the following
characteristics of each of the four elements:
Advertising: public presentation, pervasiveness, amplified
expressiveness, impersonality
Personal selling: personal confrontation, cultivation,
response
Sales promotion: communication and information value,
incentive, invitation
Public relations: high credibility, off-guard, dramatization
41
o
The decision on which element of the communication mix proves
right for a certain task will depend on the objective, the message to
be communicated and the target audience.
How is the communication concept to be executed?
o
How is the core message (USP) to be creatively presented?
(creation)
This step includes all aspects of
verbal (headlines, copy, slogans)
visual (colours, photos, pictures, drawings,
symbols, logo) and
acoustic (music, spoken language, acoustic
logo) communication
38
Bundesministerium für Wirtschaft und Technologie
, Elektronischer Geschäftsverkehr
(Berlin: 1999),
p.5.
39
Cf. chapter 8.
40
Cf. Kotler, P.,
Marketing Management
7th edn. (Englewood Cliffs: Prentice Hall 1991).
41
Ibid, p. 584f.
37
o
What media are suited to convey the message to the relevant target
group? (media planning)
For the companies that participated in this survey, trade magazines
are by far the most important media for communication. 44.1%
advertise in German trade magazines; 25.5% are present in
international trade magazines, mostly in English. This is of course
due to the fact that almost 90% of the participating companies mainly
advertise in the B2B sector. Thanks to their clearly defined and
specialised target group, trade magazines are a prime medium for
advertising to business customers. Moreover, 12.7% of participating
firms advertise in German consumer print media. This kind of
medium, however, is completely irrelevant for international
advertising. Only 1% of the companies stated they use the foreign
consumer press for advertising.
What cultural peculiarities of the target country need to be taken into
account? Has the advertising message to be adapted to the culture of the
target country
42
?
Can communication processes be standardised?
How can the brand be established internationally?
How can the corporate identity be internationalised?
o
Is the name of the company suitable for international use? (see
7.7.4.)
o
Are colours and logos suitable for international use? (see 7.7.5.)
3.3. Planning and cooperation
First and foremost, successful globalisation depends on a thoroughly laid-out
strategy. Apart from all aspects of the workflow within a company such as
controlling, logistics and human resources, the thorough planning of the international
marketing strategy plays a vital role for successful activities on foreign markets.
3.3.1. Professional planning
However, here lies one of the major weaknesses of small and medium sized
enterprises in Saxony. Many of them have no strategically planned concept of how
they are going to market their products. According to this survey, one third of the
participating companies have no marketing plan for the German market. The figure
42
Cf. chapter 7.4.
38
for export markets is even lower at 52% of companies that have no strategic plan.
This result was also supported in the intensive interviews with executives. Many of
them stated that their export activities are largely based on trial and error, and that
they apply the method of "learning by doing". Companies seem to start making
strategic considerations only after they have reached a certain level of experience
and success in the respective market.
So, what should be done if a company considers entering a foreign market? The
following step model illustrates the individual measures that need to be taken if a
company is to become a successful player on international markets:
Fig. 3.3. Steps to be taken on entering a foreign market
First of all, the management of the company should clearly define their reasons and
objectives for the expansion. This is done by less than half of the companies
Starting
expansion
Strategy
implementation
Communication
management
Adapting product, price and
distribution
Finding potential partners
Thorough market reasearch
Organising structure and financing concept
Define reasons for expansion? Objectives? Time?
Monitoring
39
participating in this study (45.5.%). As became obvious in the intensive interviews,
the decision to enter a foreign marekt is often made for intuitive reasons only,
particularly if there is a crisis on the domestic market, and if the sales figures on
existing markets are no longer satisfactory. Overcoming a crisis on the domestic
market, however, should never be the sole reason for an expansion, because the
challenges that have to be met in the course of this endeavour can be virtually
overwhelming. An expansion to foreign markets must be based on sensible
reasoning and clearly laid out objectives which are bound to a time-scheme when
they are to be achieved.
As a next step, responsibilities and financial assets should be clearly allocated.
Then comes the step of a thorough market research. Much of this can be done via
internet, but professional help should also be included. Two thirds of the companies
in this sample put a premium on market research and obtaining relevant information
about the target markets.
Another vital step is finding the right partners in the foreign countries, mostly sales
agents or partners for logistics and distribution. Organising the distribution channels
abroad is considered an important step in the internationalisation process by 45.5%
of the companies in this sample.
Then it needs to be considered whether the product meets the requirements of the
customers in the target country, and what changes or adaptations need to be made
in terms of product, price and distribution channels. The aspect of communications
should also be included in the strategical plan. It has to be considered what
message is to be conveyed to whom via which media, and what the costs can
amount to. Market communication and advertising on export markets are conducted
by less than a third of the companies in this study (32.7%).
After the expansion has started, the results should be regularly monitored, assessed
and, if necessary, adapted - a step which is taken by only 28.7% of the companies
in this sample.
40
Which measures do you take if you are preparing to enter a new market?
We define our exact objectives and develop a strategic plan
45.5%
We research exact information about the target market
66.3%
We organise distribution channels on the new market
45.5%
We take advertising measures and invest in marketing communication 32.7%
We evaluate the success and change the strategy if necessary
28.7%
Fig. 3.4. Measures taken to prepare for entering a new market
Reckoning with the fact that international companies should include
all
these steps
in their international marketing strategy, the percentages of Saxon companies that
actually do perform those measures are definitely insufficient. This underlines the
assumption that globalisation efforts of small and medium-sized companies are too
often not planned comprehensively enough from a strategic perspective, and that
this lack of strategic thinking is one of the major reasons of failing marketing efforts.
Professional help and advice to overcome this shortcoming is offered by various
institutional partners, such as the IHK or the Bfai, as well as private service
providers. The use of both kinds of resources is illustrated in the following chapters.
3.3.2. Institutional partners
Basically, there are three main sources to be tapped into for information on foreign
trade: The IHK (Industrie-und Handelskammer,
Chamber of Trade and Commerce
)
with their AHKn (Auslandshandelskammern,
Chambers of Foreign Trade
); secondly
the bfai (Bundesstelle für Außenhandelsinformationen,
Federal Agency for Foreign
Trade
), which closely cooperates with the BMWi (Bundesministerium für Wirtschaft
und Technologie,
Federal Ministry for Economy and Technology
), and thirdly the
respective embassies. Furthermore, there are many regional organisations offering
consultation, which is also partly for free, such as the portfolio offered by the CWE in
Chemnitz (Chemnitzer Wirtschaftsförderungs-und Entwicklungsgesellschaft,
The
Chemnitz Society for the Promotion and Development of Businesses
). What is
more, the web sites of those organisations offer a great variety of links to related
services.
41
3.3.2.1. Bfai (Federal Agency for Foreign Trade)
The bfai is a service facility related to the Bundesministerium für Wirtschaft und
Technologie (BMWi
, Federal Ministry for Economy and Technology
). In a great
variety of brochures and publications as well as online, it provides information on
foreign markets. The bfai also offers an individual market research service. It is a
service department of the Federal Ministry for Economy and Labour and has
declared it their aim to support German companies on their way into foreign
markets. The service department provides up-to-date information on the latest
developments in all relevant export markets. Correspondents deliver the latest
information on foreign markets, advertised biddings abroad, as well as investments,
development plans and cooperation enquiries from foreign companies. Moreover,
the bfai provides an extensive database of lawyers. The department's expertise in
terms of foreign trade is collected in more than 45,000 documents which can be
accessed via their databases. Moreover, they offer a wide range of publications,
including country-specific information on legal and tax regulations, comprehensive
market analyses, economic data and many more for more than 200 countries and
several economic associations such as the
AFTA, CEFTA and SADC.
43
They also
offer support in finding business partners and potential customers.
This is how the bfai describes itself and its tasks: "Bei der Bundesstelle für
Außenhandelsinformation (bfai) in Köln beginnt die Erforschung ausländischer
Absatzmärkte. Hier sind die wichtigen Informationen über Auslandsmärkte schnell
und kostengünstig zu haben. So hilft die bfai als Servicestelle des
Bundesministeriums für Wirtschaft und Technologie besonders kleinen und mittleren
Unternehmen auf dem Weg ins Auslandsgeschäft. Von A wie Ausschreibung bis Z
wie Zoll bietet die bfai alle Informationen online im Internet sowie als Broschüre und
in Zeitschriften an. Außerdem recherchiert der bfai-Auskunftsservice bei speziellen
Fragen. Insgesamt 174 Mitarbeiter im Inland und 45 Marktbeobachter in der ganzen
Welt arbeiten daran, Informationen über Märkte im Ausland zu beschaffen und
praxisgerecht für die deutschen Unternehmen aufzuarbeiten."
44
43
http://www.bfai.de/?uid=93a6ccb1edae281dec1fd8917f5ea95e&id=Seite213
44
http://www.bfai.de/home_b3.htm
Details
- Seiten
- Erscheinungsform
- Originalausgabe
- Jahr
- 2004
- ISBN (eBook)
- 9783832481612
- ISBN (Paperback)
- 9783838681610
- DOI
- 10.3239/9783832481612
- Dateigröße
- 2.2 MB
- Sprache
- Englisch
- Institution / Hochschule
- Technische Universität Chemnitz – Philosophische Fakultät
- Erscheinungsdatum
- 2004 (Juli)
- Note
- 1,0
- Schlagworte
- language business international communication strategies saxon small medium-sized companies
