Abdelrahman Salah

Elsharkawy

International
Marketing Exam
Dr.abdelrhman.salah.sharkawy@gmail.com
01141322344
01022992070
Note:
 The bold sentences are the most important.
 Each paragraph covers one section, for example, the
first paragraph for case debriefing. And so on.
Case 1 :
Q1;

Trade represents 48% of the country's GDP (World Bank, 2018). The Egyptian
economy has a trade deficit. Egypt is a part of the agreement of Agadir and GAFTA.
Edita has grown a export business in the face of a tough regional climate. Edita has a
footprint in more than 17 countries in the MENA region. The Middle East is the main
focus for exports, given its geographical proximity and cultural affinity with Egypt. It
relies on local distributors deals with them on a cash-in-advance basis to mitigate the
high risk. It provides them with considerable marketing support and has been able to
gain considerable market share. There was a major breakthrough in 2018 with Edita
Morocco which is a JV between Edita and Morocco’s Dislog Group, a leading local
distributor with over 65,000 points. Edita owns a majority stake of 51% of the JV.

To contribute in GDP, many companies like Edita involve different strategic levels
of International Marketing. Each level of involvement has its main strategy, mode of
entry and adaptation of 4ps dealing with the challenge of environmental adaptation.

As with regards to this case, Edita has chosen Regular Foreign Marketing in which
the firm has production capacity devoted to foreign markets. With a little
adaptation in the marketing mix. So Edita has economies of scale and has a control
on the cost but there is not enough satisfaction. Edita till now is Domestic Market
Orientation. This strategic orientation characterized by International operations viewed
as secondary, prime motive is to market excess domestic production, Minimal efforts
are made to adapt product or marketing mix to foreign markets and the firm is
ethnocentric.
As we learned, Edita export only 2.25% of its production which considered a very low
percentage so we can notice a little percent of adaptation which is distribution and price.
Edita has a simple distribution structure in which it export to local distributors, and in
Morocco it has a joint venture with a local distribution. We can consider this as
Import-Oriented Distribution Structure.
By this joint venture, Edita has a good coverage, a possibility to continue and a
good control over distribution channel. Edita provides promotional and marketing
support which enables it having a control over distribution channel.
The international price approach has some characteristics; there are no tariffs or
customs because of the trade agreements, lower cost of exporting and finally the
applying Transfer Pricing Strategy. So sales in Morocco increase revenue in Egypt.
There is another level of involvement which is an International Marketing stage with
different strategy and mode of entry.

Morocco has a 3.5% economic growth, Edita export only 2.25% of its production,
Egypt has a trade deficit and it was a major breakthrough in 2018 with the registration
and incorporation of Edita Morocco. So Edita has to involve International Marketing
level and change its strategy and mode of entry.
To increase customers’ satisfaction, the firm needs to adapt fully.

To implement this, First, Edita has to change its strategy, as we go on different levels
of involvement and next step of mode of entry, the firm face high risk and increasing
control with high equity. As mentioned, Edita tried to mitigate the risk by exporting to
local distributers, so it has to take a risk by increasing costs on adaptation and having a
control over foreign markets. Its strategic orientation has to be Multi domestic Market
Orientation with decentralized or regionalized organizational control, given its
geographical proximity and cultural affinity with Egypt. There will be full adaptation
which requires global awareness and avoiding Self Reference Criteria. This can be
done by a Moroccan regional manager.
As the demand and revenues increase, Edita could take the next step of mode of
entry which is Greenfield.

Q2;
Edita has a footprint in more than 17 countries in the MENA region. The company
relies on local distributors for the export business and deals with them on a cash-in-
advance basis to mitigate the high risk profile of the key export destinations.
There is a major breakthrough in 2018 with the registration and incorporation of Edita
Morocco towards the end of the year. Edita Morocco is a JV (Joint Venture) between
Edita and Morocco’s Dislog Group, a leading local distributor with over 65,000
distribution points across the Kingdom. Edita owns a majority stake of 51% of the JV.

Edita has selected the Direct Exporting to its partner in Joint Venture as a
marketing entry mode. It is aligned to its level of involvement, Regular Foreign
Marketing, which has a little adaptation of marketing mix. Because the product
transfers, the adaptation is hardly seen.
An entry strategy into international market should reflect on analysis;
Market characteristics: first, potential sales, Strategic importance of Morocco as a
developing country with which Egypt has several agreements, Cultural differences
which is very little given its geographical proximity and cultural affinity with Egypt,
Country restrictions which are not considerable due to the agreements.
Company capabilities and characteristics: The degree of near-market knowledge
is good given its geographical proximity and cultural affinity with Egypt, Management
commitment which means Edita allocate financial resources with Joint venture with
51%, Marketing involvement in more than 17 countries in the MENA region.

The agreement of Agadir between Egypt, Morocco, Jordan and Tunisia entered in
force since April 2007. And the Greater Arab Free Trade Area (GAFTA), a pact of the
Arab League entered into force in January 2005 which aims to form an Arabic free trade
area may be helpful in this specific market.

Case 2:
Q1;
Oriental Weavers (OW) is one of the most recognized brands. OW is the largest
and fastest-growing machine made rug and carpet manufacturer in the world. It is
leader in design, quality and innovation. With a simple vision the company became a
leading worldwide exporter and by far the largest player in the Egyptian market.
OW is the flagship company of the Orientals Group. OW, located in the 10th of
Ramadan City near Cairo, is completely vertically integrated thus providing the
company with the advantage of manipulating and producing fine fibers, and
manufacturing the world’s most innovative rugs and carpets. OW’s global presence
helps streamline its manufacturing and distribution operations while facilitating on-the-
ground market insight. At the Group level, international sales account for almost
65% of revenues supported by manufacturing facilities in Egypt, the USA and China
with distribution hubs in the USA, UK and Dubai. OW rugs and carpets are sold across
more than 150 countries. Oriental Weavers International (OWI) was established in
1998 as an export -oriented, private free trade Zone Company in the Tenth of
Ramadan City. The company’s diversified product mix related to residential and
commercial use include carpets, rugs and upholstery (Gobelin). OWI owns a 79% stake
in Oriental Weavers (Tianjin) company Ltd, China, keeping an eye on expanding its
current share in the emerging Asian market. In late 2014, a new fully-automated yarn
production facility, the King Tut, started its operations with a production capacity of 100
tons per day. Oriental Weavers products are manufactured at 31 factories (Including
feeding industry) in Egypt, China and the United States. However almost 95% of its
production is taking place inside Egypt. The government of Egypt has announced
stimulus policies with a package of USD 6.13 billion (1.8% of GDP). The Egyptian
government agreed on the reduction of natural gas and electricity prices to all
industries.
 OW think of them as a true global business. To explain this, it is needed to explain
its approach to international marketing. And how its approach affect its planning
process included adaptation of marketing mix. And how cultural dimensions may get
handy to serve OW strategic goals.

Based on the above information and analysis, we notice that OW has a dedicated
capacity for exporting out of Egypt, almost 95% of its production is taking place
inside Egypt and as we learned it exports almost 65% of total production. So, we
could consider the international marketing level of involvement of OW as Regular
Foreign Marketing with a little concern to adaptation.
OW has a Domestic Market Orientation Strategy, So we need to discover its adaptation.
Product adaptation, because OW is a leader in design, quality and innovation.
Product innovation reflect on adaptation. So if this corporate decide to change its
level and orientation, it will be easier for it. OW has a national brand name which is the
same across 150 countries, and OW does not intend to change it. This brand name
adds value as a woven rug and carpet comes from Orient. OW’s truly global
presence helps streamline its manufacturing and distribution operations while
facilitating on-the-ground market insight. So we notice that although OW is capable of
product adaption, it is satisfied with its global brand name and almost the same
exported product.
Price adaptation, OW tries to lower its cost and accordingly lower the final price to
compete globally. OW depends on vertical integration and outsourcing. Also Oriental
Weavers International (OWI) was established in 1998 as an export -oriented, private
free trade Zone Company in the Tenth of Ramadan City which lower exports costs.
OWI owns a 79% stake in Oriental Weavers (Tianjin) company Ltd, China, keeping an
eye on expanding its current share in the emerging Asian market. It use Price Transfer
Strategy. Also The Egyptian government agreed on the reduction of natural gas and
electricity prices to all industries. Which will reflect on final prices.
Cultural dimensions may get handy to serve OW strategic goals. Humans make
adaptations to changing environments through innovation. But sometimes culture
is conservative and resists change. OW not intend to change its brand name because it
adds value, as oriental culture. It was clear, when OW establish its, the King Tut,
production facility. OW are very sticking to oriental culture. So its vision is to be just
Exporter.
Based on all the above, OW is a global brand not literally a global marketing as
Amazon and Apple.

To be a true global marketing, it has to go for next steps instead exporting only.
OW has several factories, so it is easy to do FDI with its own capital depending on its
huge exporting capacity. It may use its factories in china and US for this purpose.
Due to its global awareness, on-the-ground market insight and well known global
brand, OW may make a little adapt to achieve enough satisfaction.
 To implement such alternative, the firm should first look at its vision, and make it fit
to do more international marketing instead just Exporting. Geographical divisions
responsible for all products and functions within a given geographical area may be
used. This organization may be regionalized instead of centralized.

Q2;
The government of Egypt has announced stimulus policies with a package of USD
6.13 billion (1.8% of GDP) to many sectors such as subsidy pay-out for exporters.
Authorities have also suspended the export of all types of legumes for a period of 3
months. An export ban on medical equipment has also been issued. The Egyptian
government agreed on the reduction of natural gas and electricity prices to all
industries. Furthermore, the Central Bank Egypt granted a 6 months postponement
of the repayment of loans for SMEs, together with the cancellation of ATM
withdrawal fees for the same period.

The spread of COVID-19 epidemic has major effects on both foreign and demotic
environment. As mentioned in this case, OW has production facilities in US and in
China. Which are of the most cases of covid-19. And these countries closed all
activities for a long period.
On the other hand, here in Egypt where almost 95% of capacity production, there were
banning of exporting some product and all the factories do not work full capacity.
Accordingly, this will affect the imported countries also not Egypt, China and US only.
This will affect economic, competitive, cultural and political forces.

Some considerations to be taken, first, distribute production in more than these

countries, not in Egypt, China and US only. Select another entry mode besides
exporting in some countries of 150 countries like FDI for example.

There is governmental support that may impact OW. For example, stimulus
policies with a package of USD 6.13 billion (1.8% of GDP) to many sectors such as
subsidy pay-out for exporters, The Egyptian government agreed on the reduction of
natural gas and electricity prices to all industries, the Central Bank Egypt granted a
6 months postponement of the repayment of loans for SMEs, together with the
cancellation of ATM withdrawal fees for the same period.
These polices increase cash for many firms for more expansion.