Global Marketing Management: The Case of New Balance (Business & Marketing Essay)

GLOBAL MARKETING MANAGEMENT
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Global Marketing Management: The Case of New Balance
Since its inception in 1906, New Balance has taken a careful approach, especially while entering new markets. Currently, the sports footwear and apparel brand sells its products in about 120 countries. However, in some markets, the organization has limited entry, which means there is room for growth. In Africa, for example, New Balance is only operational in South Africa. While South Africa does present a lucrative deal regarding its market, limiting operations in South Africa limits the organization’s growth considering it could expand and take advantage of the fast-growing economies of Africa. Several factors in Africa make it one of the most attractive destinations for companies right now. For example, according to Leke and Signe (2019), more than 400 companies register revenues of more than $1 billion annually. Also, Africa boasted of 6 of the 10 countries with the fastest-growing economies as well as “five of the 10 most improved countries” (Leke and Signe, 2019). With such factors, New Balance should consider investing or expanding to other African countries and taking advantage of the continent’s changing economic landscape.
Appraise Market Conditions Suitable for Entry to International Markets
With a special focus on Africa, there are a few factors or aspects that New Balance should consider before thinking of expanding to other African countries. These factors should offer the final word on whether it makes business sense to expand to other parts of Africa.
Population Growth
Population growth is indeed a crucial factor to consider while assessing a new market. According to Leke and Signe (2019), Africa’s population is “projected to reach 1.7 billion by 2030.” Also, the authors continue to write that this population growth will mainly happen in the cities. The above statement implies that Africa will transform or become more urbanized. Another aspect or factor that is influenced by population growth is expenditure. Leke and Signe (2019) note that African businesses and consumers' spending is expected to rise and “reach $6.66 trillion by 2030, up from $4 trillion in 2015.” There is room for companies like New Balance to expand their growth and grow as Africa grows with such numbers.
Rising Middle Class
Another factor that also touches on population growth is the rising middle class. As the continent is growing economically, people are getting richer and consuming more. Signe (2019) notes that by the end of this decade, “one in five of the world’s consumers will live in Africa.” This growth is expected to come with demand changes as people will ask for niche, high-quality, and foreign-produced goods (Signe, 2019). For New Balance, this is a business opportunity that needs to be explored. With a rising middle class, choice brands will indeed want to take advantage. It makes financial sense for New Balance to want to be a part of this growth. A rising middle class comes with promise since GDP growth per capita translates to higher purchasing power for the members of the middle class.
Fast-growing Economies
Even though the Covid-19 pandemic has greatly impacted growth all over the world, Bajpai (2020) from Nasdaq did manage to compile a list of countries that showcased strong growth throughout the year. In the list, Africa is represented by countries like South Sudan, Egypt, Benin, Tanzania, Rwanda, and Ethiopia. A growing economy showcases its strength through the increases in tax revenues for the government. Governments enjoying faster growth can spend more on public services. This means that more people will have access to, for example, healthcare and education. It can also translate to higher living standards because people will be making more money and thus be able to afford higher living standards. If countries in Africa are showing growth, then foreign companies must position themselves to take advantage of such growths. New Balance should not stand and watch its competitors like Nike increase their hold in the continent. However, as Leke and Signe (2019) note, it is crucial to establish whether the economies are stable or vulnerable growers. Stable growers are said to be dependent on “economic reforms and increasing their competitiveness.” Having higher dependability on a particular aspect of the economy or resource heightens an economy’s vulnerability. So, New Balance must do its due diligence and determine the more stable economies.
Growing e-Commerce Market
New Balance should also take advantage of Africa’s fast-growing telecom market. Even though Africa’s e-commerce is not as strong as in other regions, it shows promise considering the telecom market's growth. By 2021, Statista reports that Africa’s e-commerce market is expected to reach $24 billion. Revenue from e-commerce is also projected to rise or grow at a rate of 13.3% every year until 2025. Another crucial statistic for New Balance should be the fashion market that is projected to grow and hit a market volume of more than $7 billion. As indicated in the image below, Africa is headed for more growth, and it is only the companies that position themselves better that will reap the benefits.
Source: /outlook/243/630/ecommerce/africa#market-revenue
Pestle Analysis
Political
Many countries in sub-Saharan Africa are relatively functioning democracies. While the political landscape is volatile, they are relatively stable enough to invest in them. Most of them are relatively very stable and create a conducive environment for multinationals to invest in them. At the moment, premier brands from the West like Prada, Nike, Skechers, Adidas have stepped into the sub-Saharan market CITATION The19 \l 1033 (Ikalafeng, et al., 2019). However, there are a few exceptions, like Zimbabwe, which had a coup a few years ago and has been grappling with hyperinflation stemming from political turmoil. DRC and Uganda have had unending conflicts with rebels though they have remained relatively stable.
Economic
Some sub-Saharan African countries have the fastest growing economies in the world CITATION Jas19 \l 1033 (Mitchell, 2019). These countries have been rebuilding their economies after colonialism, and their average economic growth has been rising steadily. They are prime for investment to dominate the markets as their economies continue to grow.
Social
Sub-Saharan Africa has a strong sporting culture, as evidenced by the strong fanbase of European football clubs CITATION The202 \l 1033 (The African Report, 2020). The culture has birthed strong online gambling for sporting events throughout the world CITATION Isa17 \l 1033 (Kaledzi, 2017). Sub-Saharan countries also excel in athletics, and they have created a strong sporting culture in the continent.
Technological
While Africa, in general, has been lagging in technological adoption, it has stepped up technological adoption. Some countries like Kenya have created unique solutions to their technological problems through products like Mpesa, which spurred accelerated economic growth (Njiiri & Fu, 2020). Generally, more Africans have telecommunication devices like mobile phones, and most of them in cities own smartphones. The existing tech infrastructure can support eCommerce, and tailored marketing content conveyed through existing infrastructure like mass media, social media, etc.
Legal
Each sub-Saharan African country has different regulatory processes, especially regarding foreign companies. A new entrant into the market would have to navigate each country independently and tailor its market entrance to reflect the laws of the land. In case of legal issues, most countries have functioning judicial systems that can address those issues impartially.
Environmental
Sub-Saharan Africa has little that can adversely affect the New Balance strategy into the region. Currently, the environmental impact of the company is not large as it has few factories in western countries where they have been compelled to follow environmental guidelines CITATION The181 \l 1033 (The Challenger Report, 2018). As for Africa, the likely biggest environmental impact would stem from shipping. However, New Balance can ship its goods using water transport with the lowest environmental impact of all transport modes and further reduce its environmental impact. For landlocked countries, railway transport can suffice.
Critically evaluate the major issues relating to globalization and analyze the implications for global marketing planning
Language and cultural barriers
Companies run into a big problem when communicating and reflecting the cultures of the new market. Different countries have different languages, and, in some countries, the dominant languages are diverse. In some cases, the same language may have variations, and these factors have to be considered in a new market. For example, football is an English word, but it refers to two different sports in America and Europe. Some countries like South Sudan have 64 tribes, and finding a way to culturally connect with all of them would be a big challenge CITATION UNP18 \l 1033 (UN Peacekeeping , 2018).
Cultures are different across the world. It is important to consider cultural values when marketing and penetrating new markets. Many compani...