Plan for Hydrogen-Powered Vehicles Entering Hong Kong Markets Essay Example for Free

Plan for Hydrogen-Powered Vehicles Entering Hong Kong Markets Essay Introduction Nowadays, the problem of global warming and greenhouse effect has raised concern all over the world. During energy generation, Fossil fuel releases large amount of chemical substances that exacerbates the problem. However, nowadays, there is still a great dependence on fossil fuel for generating energy in Hong Kong. To overcome the problem, hydrogen fuel is an opportunity for our society to minimize the environmental effects, enhance energy security, and the sustainability of global energy resources. In addition, many countries have been promoting the environmental protection at present. Therefore Hong Kong is not the exception. Our company – Ford has decided to introduce the hydrogen powered vehicle to Hong Kong by exporting from a car factory in United State and promote it to local citizens. In the following, various analyses including PESTLE analysis, marketing strategies, market entry modes, international operation management, and hiring and employee management will be illustrated. The Political, Economic, Socio-cultural, Technological, Legal and Environmental dimensions Political The Hong Kong Government has introduced some policies in promoting low air pollutants emitted transport. Firstly, tax Incentives for environmental friendly vehicles is provided. A 45% reduction in the first registration tax, subject to a cap of HK$75,000 per car, will be offered to buyers of newly registered environment-friendly cars. In addition, the government also encourages trial of green and low-carbon transport technologies. The Government has set up a $300 million Pilot Green Transport Fund for application by the public transport trade and goods vehicle owners. For vehicles, the subsidy level is the price premium between the alternative-fueled vehicle and the conventional vehicle or 50% of the cost of the alternative-fueled vehicle and 50% of the setting up cost of the related support facilities. The policies give lots of incentives to the users to transfer their car to the hydrogen powered one. Economic Hong Kong is a developed and affluent country. According to the statistic of Census and Statistics Department, in the second quarter of 2012, the Hong Kong Gross Domestic Product for is $473,171 million. And the private consumption expenditure increases by 3. 1% in the real term. The per capita GDP is $273,657 million in 2011. Moreover, there is about 55% of population belong to the middle class (people who receive income above median). The family monthly income is also rated 17 thousands to 30 thousand. It reflects that the hydrogen powered vehicle is affordable to the upper and middle class. Hong Kong is a high potential market for our product. Socio-cultural Hong Kong people are highly educated with a strong perception of environmental protection. With the rising environmental promotion from the government, the awareness of green concept is becoming popular gradually. Firstly, citizens promote going green in order to alleviate the air pollution problem. Secondly, a higher living standard can be achieved with improved air quality. Thirdly, our product promotes the use of renewable energy. Thus it helps solving the problem of energy shortage. Our product will attract local citizens with high environmental awareness. Technological The infrastructures and facilities in Hong Kong are well developed such as Tseng Ma Bridge, and Kwai Tseung Container Terminal is the third busiest port in the world since 2007. The fast and efficient shipping and delivery of the vehicles are supported. Moreover, businesses can obtain technical consultation and professional backup from science parks and the prestigious universities in Hong Kong. For instance, Hong Kong Science Park, Cyber Port, and the University of Hong Kong are well-known. Legal It is lawful to employ the hydrogen car in Hong Kong. Although people sometimes argue that hydrogen cars exist dangerous, we still believe that it will not happen nearly if we can control the quantity of hydrogen we use in cars. We will also set the knock sensor systems in the car to reduce the probability of knock occurrence and the impacts. Europe has just legitimate hydrogen cars and there are not any local laws said that is illegal in Hong Kong. Besides, as the fuel of the hydrogen powered vehicle is not fossil fuel anymore but replaced by hydrogen. Selling and buying large amount of hydrogen is legal in Hong Kong allowing the users to refuel. Environmental Distribution of Hourly API for General Stations for the period October 2012 | | Legend| | API| Percentage| | Severe (201-500)| 0. 00 | | Very High (101-200)| 0. 08 | | High (51-100)| 65. 23 | | Medium (26-50)| 34. 59 | | Low (0-25)| 0. 10 | | | According to the above table, the API for general stations is mainly at medium to high level but more at the high level (65.23%). Serious air pollution is a considerable problem in Hong Kong. Heavy traffic has contributed to the deterioration of the problem. The problem has been negatively affected not only physical health of local citizens, but also the tourism. According to the research from Civic Exchange, there are 90% interviewees, who are Hong Kong citizens, are caring about the issue of air pollution. Besides, the percentage of air quality dissatisfaction raised dramatically compared to 2001. The hydrogen powered car, which will help relieve the problem, will gain support from local citizens. This is an opportunity for our company to introduce hydrogen powered car to Hong Kong. The Market Entry Mode The market entry modes in Hong Kong are Foreign Direct Investment and exporting. Ford will set up a subsidiary to manage the businesses and also establish a specialty shop to promote and sell the hydrogen powered car. The hydrogen powered vehicle will be exported from the plant in China to the store in Hong Kong. Our firm undertakes FDI because of the combination of location advantage, ownership advantage, and internalization advantage. Location advantage Hong Kong has a comprehensive transportation network such as port and flexile highway which is beneficial for exporting the vehicles to Hong Kong. The advanced telecommunication also drives down the cost in communicating with the factory and the consumer. On the other hand, Hong Kong has a number of tax incentives under special arrangements on the Mainland. The key areas, including shipping, aviation, land transport and personal tax, can be exempted from double taxation and enhance the profitability of our firm. Ownership Advantage Ford has a strong brand name with the perception of good reputation and excellent performance of the vehicles in the consumer’s mind. It is useful and easily for promoting the vehicles in Hong Kong in order to gain more sales volume and increase the market share. In addition, our firm also possesses the hydrogen power technology outperforming with its competitors. It is a necessary part for the manufacturing and assists fighting in the keen and saturated competition of fossil fuel-powered automobiles. Internalization Advantage. As hydrogen-powered car is a new market in Hong Kong, Ford can gain a high market share by firstly introducing the car into the new market. Besides, the firms emphasizes on high standard of customer service, there will be better controlling by serving customers by ourselves rather than hiring an independent local company to offer it. For example, there is more clearly explanation and illustration to the queried customers by our experienced staffs. Marketing Strategy of hydrogen powered vehicle Product The factors Hong Kongs business environments have to be considered for the product strategy. For the national image, the brand name of Ford brings good reputation and excellent quality to the consumer’s mind. Consumer has confidence in purchasing our company manufactured vehicles that helps us to enter the market. In addition, hydrogen power is a complicated technology that is difficult to copy that prevents the creation of counterfeit goods. Place Our established specialty shop is responsible for consulting service and selling the hydrogen powered vehicle to the customers. Our distribution network is relatively short (manufacturer, specialty store, customers) to maintain a greater control over the planning and implementation. There is only an exclusive channel – owned specialty in the distribution channel in result of shorter channel length. It saves the cost of owning one store instead of having lots of intermediaries in the distribution channel. Price The pricing strategy our firm used is dual pricing that different selling price abroad than at home. As our firm adopts the differentiation strategy, we set the price based on the Hong Kong buyer’s value as well as the living standard. This method overcomes the problem of exchange rate and fits the local purchasing power which also increases our profitability for selling the vehicles. Promotion As our market and product are both new so that production invention of marketing communication strategy is used. Our firm is going to advertise on the famous car magazines and car forum to promote the new product launch. This can raise the car users’ awareness of this new product. Besides, our firm is going to use Public Relation tools for promotion. Celebrities will be invited to experience the hydrogen-powered vehicle before the product launch. Then the feedbacks or recommendations from the celebrities will create a world-of-mouth effect, as well as buzz in the entire society. Managing International Operations Production Strategy The production strategy of Ford hydrogen powered car is focus differentiation which aims to provide the hydrogen-powered car to the market of environmental friendly private car users. Facilities location Planning Besides, Ford adopts the location economies of the facilities location planning. The company produces the car in its largest production location in the United State. The production location offers sufficient technologies and experienced technical staffs and engineers required to produce the hydrogen-powered vehicle. Although the labor costs in developed countries must be relatively higher compared to some developing countries such as China, there are better quality control and productivity through utilizing the experienced labors and the local advanced machines in Germany. Moreover, the distance factory – United State to the market – Hong Kong is also relatively longer, but the transportation facilities and infrastructures are mature in both countries. For example, the seaports are available for the transportation. The company can deliver the car by water carriers in order to enjoy lower shipping cost to cover the high unit cost. JIT Manufacturing In order to further reduce its high manufacturing cost, Ford adopts the Just-In-Time manufacturing system decreasing its inventory costs. The inputs including the raw materials, component parts, and sub-assemblies can be minimized because those input are delivered as the factory receives the orders from the dealer in Hong Kong for the production process. The reduced cost not only gives the company higher profit margin, but also offers the product with a more acceptable and affordable price for the consumer in Hong Kong. Furthermore, as the hydrogen-powered car is not very common and popular in most cities, the demand is relative small and uncertain. JIT system can assist the company to avoid holding too much inventories and creating wastes which are costly. Hiring and Managing Employees Staffing Policy For recruiting the top managers in Hong Kong subsidiary, Ethnocentric Staffing is used that the top managers are from home country – United State as they understand the hydrogen-powered car project more clearly and own sufficient information and knowledge to handle the whole operation in Hong Kong more efficiently and effectively. It will also result in better planning in both short term and long run that gives a much more clear direction to the subsidiary. For employing the middle managers and non-managerial workers, geocentric staffing will be used to select the best-qualified individuals, regardless of nationality. Compensation of Managers Ford gives some compensation to the expatriate managers including cost-of-living effects and bonus and tax incentives as well. The company should not only make up the local goods and services differential, but also have to give the bonus and tax incentive to convince the top managers staying abroad longer. Moreover, the firms also should provide language training and sensitivity training to the oversea managers to better the ability of bridging cultural differences and living in foreign country. Labor-Management Relations Maintaining a strong relationship between managers and workers is extremely essential because it is affecting the productivity as well as cost. Workers should be constantly motivated to enhance their productivity by offering more deserved outcomes such as pay, benefits, and vacation time. Besides, badly treated employees may leave the organization if they have other employment options which cost an expensive hiring and training cost especially the experienced technical staffs. Therefore, Ford can collect the opinions and feedbacks from the employees as well as solve their problems through the labor union in order to boost the relationship. For example, the labor representatives can participate in high-level company meeting by actually voting on proposed actions. Conclusion To sum up, our company is confident of entering the Hong Kong market with the hydrogen powered vehicle through the above supportive analyses. The constructive marketing strategy will help firm to promote the vehicle more effectively. Furthermore, the effective and efficient international operation management and the human resource management will bring the success to become the market leader not only in Hong Kong. In the future, the hydrogen powered vehicles will be promoted in different parts of the world in order to maximize the profitability. References 1. Statistics of Middle Class population http://www. gov. hk/sc/about/abouthk/factsheets/docs/population. pdf 2. Statistics of income median and GDP http://www. hkcna.hk/content/2011/1031/118642_2. shtml http://www. censtatd. gov. hk/hkstat/sub/so50_tc. jsp 3. Hong Kong environmental policies http://www. epd. gov. hk/epd/tc_chi/about_epd/env_policy_mgt/env_policy. html 4. An overview of air quality in Hong Kong http://www. epd. gov. hk/epd/tc_chi/environmentinhk/air/air_maincontent. html http://www. epd. gov. hk/epd/tc_chi/environmentinhk/air/studyrpts/air_studyrpts. html 5. The public has the awareness and knowledge of environmental protection http://net2. hkbu. edu. hk/~enews/view_article. php? id=13430 http://www. info. gov. hk/gia/general/199902/23/0223epdc. htm.