Strategic Management Class Commentary, Essays (university) of Strategic Management

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Class Commentary #2:

Production, Cross-Cultural Management, Marketing and Consumption

Bianca Chitiu

ADM 3317

Professor: Dr. C.S. McWatters

Date: March 1 7 , 2020

This week’s course examined the entry into global markets, specifically in developing countries, by analyzing the company’s strategies in terms of marketing and persistence. In the article, “ Nestlé in the Ottoman Empire: Global Marketing with Local Flavour 1870- 1927 ”, it examined Nestlé’s marketing efforts in regards to the socio-political environment within the Ottoman Empire and how the company struggled to develop differentiated strategies, compared to Europe, in order to reach their target market. Furthermore, in “ Learning to Live with Governments: Unilever in India and Turkey, 1950- 1980 ”, it examined the socio-economic development of India and Turkey through the role of the government and the impact it had on Unilever. In both articles there was a consistent standpoint that I want to analyze. Both companies were moving into new developing markets with little understanding on government regulations in terms of business capabilities. Nestlé and Unilever had to cope with cultural and demographic differences in order for their products to meet local market standards and requirements, and generate a good reputation to attract customers. It becomes very evident that both companies, in their pursuit to enter diverse markets, looked to localize themselves into the society and adopted a long-term, flexible strategy adjusting to political circumstances. Lastly, there is a clear distinction in terms of both companies’ distribution methods that I found particularly interesting to address. Nestlé came from a European market and integrated into the Ottoman Empire which resulted in them pursing flexible strategies to reach their consumer target. Since both markets differed, Nestlé focused more on intensive advertisements rather than price competition or product differentiation in order to gain a competitive advantage (Koese, 2008, p. 727 - 728 ). Their first product, Farine Lactée, became a substitute for milk products that were very scarce in the new market, therefore their high consumer demand resulted in the need for economies of scale while increasing their distribution strategy (Koese, 2008, p. 730 ). Unlike Unilever, which I will later discuss, they conducted a decentralized distribution where agents in Ottoman Empire, preferably with Swiss backgrounds or connections, were responsible for the import and delivery of the product to local wholesalers and retailers (Koese, 2008, p. 732 ). Both European and Ottoman-Turkish markets had the same advertisements, however, Nestlé was faced with additional challenges in terms of language barriers and literacy rates in the Ottoman Empire. To overcome such obstacles, they had to look beyond European marketing techniques of advertising through buses and trams, and adopt the traditional method of Ottoman guild artisans – marching

problems, invested largely in research and development, helped locals gain loans and increase human capital, and looked at creating technological innovations in India (Jones, 2007, p. 86 ). Unlike Nestlé, Unilever didn’t look to appoint agents, with certain backgrounds, to distribute their products. They built a strong local management cadre that could negotiate with the government on the company’s behalf and eventually turned India into an exporter of management talent (Jones, 2007, p. 91 ). The same could be said with their integration in Turkey. They were the first to move into the market with cheap prices. Using the knowledge they gained from India, they started to help develop the economy, including its infrastructure, taking a long- term view. The government regulations made it very difficult for them to operate, however, they believed that once the liberalization of investments and removal of constraints ensued, competitive investment would arise. With this said, the company knew that if they were already well established in the market, they would have that competitive advantage instead of having to re-enter upon economic development (Jones, 2007, p. 95 ). Both companies struggled with their integration into new markets. While Nestlé and Unilever both used different methods of distribution, it was evident that long-term, flexible strategies was what led to their success. They had to cope with demographic and cultural differences in each market to meet local requirements and effectively integrate. Both companies tried to move past the reputation of a foreign company and looked to localize themselves into the society regardless of the political regulations. Ultimately, it was their ability to adapt to the different markets that led to their international success. References: Koese, Y. (2008). Nestlé in the Ottoman Empire: Global marketing with local flavor 1870-

1927. Enterprise & Society 9 (4): 724- 761. Jones, G. (2007). Learning to Live with Governments: Unilever in India and Turkey, 1950-
1928. Entreprises et Histoire 49 (4): 78 - 101.

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reviewed the entirety of my attached work and that I have applied all the appropriate rules of quotation and referencing in use at the Telfer School of Management at the University of Ottawa, as well as adhered to the fraud policies outlined in the Academic Regulations in the University’s Undergraduate Studies Calendar. Academic Fraud Webpage

___Bianca Chitiu_________ ______March 17 , 2020_______

Signature Date ___Chitiu, Bianca________________ _____ 7829013 ______________ Last Name (print), First Name (print) Student Number