International School of

Management

An International Marketing Plan
for
The Launch of an Electric/Hybrid Car by a French
Auto Manufacturer in the United State Market




By Anteneh Getachew


June 2014






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Table of Contents
1. Introduction ........................................................................................................................... 1
2. Historical Background of Green Technology ..................................................................... 4
3. The Global Development of Electric / Hybrid Car Manufacturer ................................... 5
3.1 Global marketing and sales situation of Electric/Hybrid cars ............................................ 6
3.2 French Electric / Hybrid Car Manufacturers ...................................................................... 7
4. Motives and Ways of Internationalization .......................................................................... 9
4.1 Pro-active Motives ............................................................................................................. 10
4.2 Reactive Motives ................................................................................................................ 12
4.3 Critical barriers ................................................................................................................. 13
5. Company's International Competitiveness ....................................................................... 14
5.1 Macro level ........................................................................................................................ 14
5.2 Meso level analysis ............................................................................................................ 17
5.3 Micro level ......................................................................................................................... 21
6. Political and Economic Barriers to export of electric/hybrid cars to the U.S. .............. 24
6.1 Political Barriers ............................................................................................................... 24
6.2 Economic Barriers ............................................................................................................. 25
7. The Influence of Culture on the International Marketing Strategy ............................... 27
7.1 Hofstede's Model ................................................................................................................ 27
7.2 Edward Hall ....................................................................................................................... 28
8. The type of market entry modes that the French car manufacturer should consider .. 30
9. International Product Life-Cycle and its implications for the electric /hybrid car....... 36
9.1 International Product Life Cycle (IPLC) ........................................................................... 36
9.2 PLC Implications for the Electric/Hybrid Car Models...................................................... 43
10. Conclusions and Recommendations ............................................................................... 46
10.1 Conclusions ........................................................................................................................ 46
10.2 Recommendations .............................................................................................................. 49
Reference ..................................................................................................................................... 51
Annex-I..........................................................................................................................................54
Annex-II.........................................................................................................................................55
Annex-III........................................................................................................................................56
AnnexIV........................................................................................................................................ 57








1. Introduction
2


The automotive industry has been around for over a century and has developed vehicles that use
different technologies to power their cars that includes steamers, electrics, internal combustion
(e.g. diesel, rotaries, and turbines), fuel-cell hybrids, pure electrics, and hydrogen fuel-cell
(McGrath R. N., 2012). "Since the early 1900s, electric-powered vehicles have stayed in an
uncertain state at the fringe of legitimacy when compared with the dominant vehicle design of
gasoline power. Due to urban air pollution, the California Air Resources Board (CARB)
mandated two percents of the cars that manufacturers sell in California must be electric vehicles
starting in 1998" (Christensen, The innovators dilemma: When new technologies cause great
firms to fail , 1997, p. 159). Performance improvements demanded by the market, and the
performance improvements supplied by the technology will create the trajectory map for electric
vehicles.
Electric Vehicles (EVs) and Hybrid Electric Vehicles (HEVs) are driven forward by an electric
motors powered by rechargeable battery packs. Electric motors can convert 75 percent of the
chemical energy from the batteries to power the wheels. The internal combustion engines (ICEs)
are less energy efficient as it can only convert 20 percent of the energy stored in gasoline
(Dolcera (website). Electric Vehicles Market., n.d.).
Electric Vehicles emit no exhaust pollutants and the power plant producing the electricity is less
pollution than gasoline vehicles. The performance benefits of electric motors provide quiet,
smooth driving, and quick acceleration than ICEs.
Due to advocacies of clean and unpolluted world environment by money interested groups and
political parties one of the pollutants like CO2 emission has been criticized all over the world.
One of the most pollutant industries is the transportation sector. Karamitsios (2013, p.6) holds
that "the transportation sector has contributed significantly to the increase of CO2 emissions
3

worldwide". This is due to heavy reliance of the sector on fossil fuel technologies (Karamitsios
A. , 2013).
In order to expand the use of non pollutant alternative vehicles many governments like the U.S.
federal government has established various incentives and regulations that urge new
entrepreneurs and corporate entrepreneurs to invest in the green-technology vehicle market.
(Karamitsios A. , 2013). Emanating from the governmental regulations and incentive programs
on environmental pollution, different manufacturers started to come up with the launching of
environmentally friendly technologies such as Electric Vehicles (EVs) and Hybrid Electric
Vehicles (HEVs). This change in product development enables providing innovative cars with an
added value of gas consumption efficiency and other environmental friendly aspects.
In addition to this the car market is strongly developed internationally for the production as well
as for the marketing and selling process. According to Peter (2012) "In today's competitive
environment, developing an international marketing strategy is common and used by many
companies to open business perspective, remain competitive and fulfill customer needs across
the globe. However, implementing an international marketing strategy is a long and expensive
process, especially in a competitive market such as the car market of the United States. As per
the US Bureau of Transit Statistics (2004), the number of registered passenger vehicles in the US
is 243,023,485" (p. 1). The environmental policy and the measures to promote the energy
transition encourage the purchase and sale of electric vehicles.
According to Catero and Ghauri (as cited in Peter, 2012, p. 1), "International Marketing is the
flow of a company's good to consumers in more than one nation with the objective of profit.
International marketing allows enlarging the company's target and increase the number of
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potential customers and probable sales. Nevertheless, international marketing can be source of
success or failure if wrongly managed or implemented".
The same author asserted that " all products cannot be marketed on an international level, the
potential demand has to be effective, the product has to provide an added value for the customer
and be well marketed according to cultural, economical and many other factors" (Peter, 2012, p.
1).
This paper is about international marketing plan for the launch of an electric / hybrid Vehicles by
a French auto manufacturer in the US market. In this paper we will discuss about historical
background of green technology, and the global development of Electric / Hybrid car
manufacturer.
This paper will addresses more specifically the reactive and proactive motives for exporting
electric / hybrid vehicles, examine the companys international competitiveness at the macro,
meso and micro levels, the possible economic and political barriers that would impact the export
of cars to the United States. The paper also covers the influence of culture on the international
marketing strategy and the type of market entry modes that the French car manufacturer should
consider. In addition it describes the International Product Lifecycle (IPLC) and its implications
for the electric /hybrid car models.
2. Historical Background of Green Technology

According to Bellis (2014) green technology is the long as well as short term impact of new
inventions on the environment. This technology has the purpose of making our planet green. The
same author pointed out that energy efficiency, recycling concerns for safety and health and
renewable resources, among others are what environmentally friendly innovations in energy
technology is all about.
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"The CO2 emission has become a bigger and bigger problem around the world today. Its hard to
open a newspaper without reading about the polar ice is melting or that its getting warmer"
(Lehman, 2009, p. 6). According to the Boston Consulting Group "the causal correlation between
CO
2
emissions and global warming is now widely accepted by a solid majority of the scientific
community. The significant damage caused by global warming and the intense public awareness
of this topic make the challenge of reducing CO
2
emissions the major force currently driving
development of alternative concepts for automotive propulsion" (Boston Consulting Group, as
cited in Philipp & Haiss, 2010, p. 9).
An important incentive for new technologies was stipulated in 2007 by U.S. government by
enacting the Energy Independence and Security Act, formulated by the Congress, which forced
the automobile manufacturers to achieve a limit of 35 mpg by 2020 (Karamitsios A. , 2013).
The same author identified that, various programs that provide financial back-ups to car
consumers have also been devised by the U.S. government.
These incentives involve:

Loans for the promotion of battery research and other green-technology development for
vehicles.
Support for electric vehicle (EV) battery charging station implementation.
The EV purchasing by the federal government (pp. 22-23).
3. The Global Development of Electric / Hybrid Car Manufacturer

Car manufacturers have to deal with increasingly stringent norms and customers who are
increasingly demanding with respect to fuel savings. As a result, large numbers of them are now
looking into solutions that involve electrifying their vehicles. But not all manufacturers are
necessarily using the same strategies (The development of hybrid and electric vehicles, 2011).
6

The market for hybrid and electric vehicles is still largely dependent on these premiums for
helping it to grow and reach a critical size. Manufacturers and other bodies involved in the sector
are well aware of this and are striving to take advantage of these tax shelters. Although the
market is very dependent on these premiums, and despite all the risks that such dependence
brings, the majority of manufacturers are counting on hybridizing their range - a practice that
was initiated by Toyota. At the same time, most manufacturers are making progress on their
electric vehicle projects (The development of hybrid and electric vehicles, 2011).
Beyond simply being a "race" to launch the first mass produced electric vehicle for the general
public, two main approach strategies for electrifying vehicles are emerging quite clearly. The
strategy favored by most manufacturers involves gradually hybridizing their range, with the
electric vehicle at the very end of the chain, as Toyota is doing. Renault, on the other hand, has
turned the electric vehicle into an area for strategic development and is already planning to
release four different electric models for the 2011- 2012 period (The development of hybrid and
electric vehicles, 2011).
3.1 Global marketing and sales situation of Electric/Hybrid cars

The demand of global market is growing sharply over two times from 45,000 units in 2011 to
113,000 units in 2012 as indicated in Annex-I. The market share of hybrid and pure electric car
volume in 2009 and 2020 projective volume are still very small percentage in vehicles industry
as shown in Annex-II.
As explained by the France Diplomatie (n.d.) "Europe has become the second largest market for
electric vehicles behind the United States and ahead of Japan. 18,939 electric vehicles were
registered in Europe during the first half of 2013 (compared with 15,503 during the first half of
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2012), while the United States registered almost 30,000 electric cars and Japan less than 6,000"
(para. 7).
When we see the top electrified vehicles sales in the world " the Nissan Leaf dominated sales
globally and #1 in 2013. The Chevy Volt, especially thanks to strong sales in the US, was #2.
The Toyota Prius Plug-in inched out the Tesla Model for #3. And not too far behind the Model S
was #4 and the Mitsubishi Outlander Plug-in is#5. After that, sales drop off quite a bit and
Renault Zoe ranked as #6 globally" (Shahan, abb-conversations, 2014, para. 1).
The same author further ranked the top electrified vehicles sales in Europe as a whole, "the
Nissan Leaf again took #1 in 2013. However, in this region, #2 was the Renault Zoe. The
Mitsubishi Outlander Plug-in wasnt far behind at #3, followed by the Volvo V60 Plug-in and
then the Renault Kangoo ZE. But the results in specific European countries varied quite a bit"
(Shahan, abb-conversations, 2014, para. 2).
3.2 French Electric / Hybrid Car Manufacturers

France accounted for sales of 9,399 of hybrid electric vehicle units a very modest increase of
2.9% on 2008, but importantly, on a market share that fell.
According to Shahan (2014) in 2013 the Renault Zoe captured 37% of the market, the Renault
Kangoo ZE (an electric van) got another 28% and the Nissan Leaf took third place with 10%
electric vehicles market share in France. The rest three EV manufacturers Bollor Bluecar,
Renault Twizy and Goupil G3 took the 4th, 5th and 6th place respectively. Five out of these top
six models were vehicles produced in France by French companies.
As it has been explained in the above section, one of the major green technology vehicle markets
is the introduction of Electric Vehicle (EV). According to the information of France Diplomatie
"The implementation of an environmentally responsible public policy at the national and local
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level and the supply of vehicles produced by French manufacturers have enabled France to
become the largest electric vehicle market in Europe" (France Diplomatie, n.d.). Among the
Electric Vehicle manufacturers in French, Renault has played a pioneering role to achieve this
top ranking.
To look at the industrial environment of Electric and hybrid cars in France, the list of
manufacturers are concisely summarized by Shahan (2014) as follow:-
Table 1: List of electric and hybrid car manufacturers in French
No. Description Performance, number of
Seats and price in Euro
1 Renault Zoe is a good-looking, 100%-electric, super-affordable
car. Its about the same price in France, its home country, as the
Nissan Leaf is in the US, and just a little more than the base Leaf
costs in France (18,090).
The Zoe was the 2nd-best-selling electric car in Europe in 2013
next to Nissan Leaf. It is also the first best-selling car in France.
Despite only being available in Europe, it was the 6th-best-
selling electric car in the world in 2013 the highest-ranking
car to be available on only one continent.

Renault is the French leader of the car industry in France, with a
turnover of 38 billion and more than 3 million car sold in 2010 ,
the company recently launched a new range of electric cars in
France
Travels 210 (130 miles)
kilometers per single
charging
Have 5 seats
Its price is 20,900
Available in Europe
2 The Renault Kangoo ZE, the Renaults electric van, is doing
quite well. It was the 5th-best-selling plug-in in Europe in 2013,
and the 10th-best in the world. Furthermore, in its home country
of France it is the second best-selling car, the Kangoo ZE
represented about 12% of all Kangoo light commercial vehicles
sales.
Travels 170 kilometers
(110 miles)
2-seat or 5-seat options
versions.
Price is 20,450.
Available in Europe
3 The Renault Twizy is a cute and fun little two-seater that comes
in at a super affordable price. With just two seats, its clearly not
a family car, but it is a ton of fun to drive and very adequate for
most driving needs. Because of its small size, the Twizy was the
10th-best-selling electric car in Europe and 15th-best-selling
electric car in the world in 2013. It is also the 5th best selling in
France in the same year.
Travels 80 km (50 miles)
Have 2 seats
Price is 7,240
Europe (& reportedly US
on eBay)

4 The Citren C-Zero is produced in France but it was developed Travels 150 kilometers (93
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No. Description Performance, number of
Seats and price in Euro
in collaboration with Mitsubishi Motors Corporation and shares
the model with the Peugeot iOn. It is the 16th best-selling car in
Europe and 12th best selling in France in 2013.
miles
Have 4 seats
Price is 29,600
Available in Europe
5 The Bollor Bluecar is a low-price, simple electric car produced
and only available in France. It is used in the Autolib car
sharing program in Paris, but is also available to retail customers.
It was the 16th-best-selling electric car in Europe in 2013.
Travels
250kilometers(155 miles)
4 seats
12,000 + 80/mo battery
Available in France
6 Peugeot iOn is essentially the same as the Citren C-Zero and
Mitsubishi i. The Peugeot iOn was the 17th-best-selling electric
car in Europe in 2013 and 11th in France.
150 kilometers (93 miles)
4 seats
29,600
Available in Europe
7 The Goupil G3 is a 100%-electric utility vehicle designed for
services like garbage disposal, construction site support, leaf
collection, park maintenance, etc. It is produced and primarily
sold in France. The Goupil G3 came in #18 in European EV sales
and the 6th in France in 2013.
120km (73 miles)
Price is 17,000
Available in Europe
8 The Mia Electric Mia is built in France by a French company,
but staff include former VW design boss Murat Gunak and ex-
Bertone design chief David Wilkie. It looks like a cute and very
useful EV for last-mile deliveries and related services. The EV
came in #20 in European EV sales in 2013.
80130 kilometers / 5081
miles
Have 3 seats
Price is 12,255
Available in Europe
9 The Citren Berlingo EV is a 100%-electric version
of Citrens Berlingo vans. The electric van is available in
several European countries. It is produced in France & is actually
used by the French postal service.
171 kilometers (106 miles)
Have 2 seats
Price is 26,220
10 The Peugeot Partner EV is the same as the Citren Berlingo EV.
The electric van is produced in France but is available in
several European countries.
171 kilometers (106 miles)
Have 2 seats
Price is 26,220
Source: Own construction based on (Shahan, evobsession.com/electric-cars-2014-list/, 2014)
4. Motives and Ways of Internationalization

The basic motive of firms in exporting products is to make money. However, as in most business
activities, one factor alone once in a blue moon accounts for any given action. Frequently a
combination of factors results in firms taking steps in a given direction (Hollensen, 2011).
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The launching of an electric/hybrid car by a French auto manufacturer in the US market is a
business strategy that derived from serious of proactive and reactive motives that could be
advantageous for a French car manufacturer and make the product a success abroad.
4.1 Pro-active Motives

Proactive motives represent stimuli to attempt strategy change, based on the firms interest in
exploiting unique competences (e.g. a special technological knowledge) or market possibilities
(Hollensen, 2011).
Among several proactive motives the following are the major firm's initiation to launch the
French manufactured electric car in the United States.
Profit and growth goals: - a French electric/hybrid car manufacturer should plan to earn from
the opportunity to generate profits by capturing a new market and generating additional sales that
will enhance manufacturer competitiveness both on a national and international perspective
(Peter, allfreepapers, 2012). When we look at France 2013 electric car sales, five out of the top
six electric vehicles (EV) models were vehicles produced in France by French companies. Those
manufacturers should find an alternative than the French market which is very competitive and
less opportunities.
Technology competence/unique product: - The French electric/hybrid car manufacturer can
get advantage from the technological competence and knowledge of French engineers and its
experience. There are several electric/hybrid car manufacturers in France and the advancement
of the technology due to competencies at national level will help to develop a product that is
unique in performance and efficiency that can be preferred by U.S. customers (Peter,
allfreepapers, 2012). In addition to this the French EV/HEV manufacturers will get benefit in
implementing a product and marketing diversification and this will increase the company's
11

market share at global level. (Hollensen, 2011). Similarly the launch of new EV/HEVs product
to U.S. market could help French manufacturers to improve their brand image all around the
world.
Foreign market opportunities/market information: As proactive motives, the French
company needs to understand that the U.S. could be a foreign market opportunities as American
people like cars (they can drive since 16 years old), they all have cars. On top of that in the
economic and environmental context, hybrid cars could be great for this market to launch such
car (International marketing car industry, 2012). To substantiate the U.S. market of electric
vehicles as illustrated in Annex-III, in 2012, the demand of 100% electric and plug-in hybrid
electric cars grew tremendously and nearly three times volume of 2011 (2010 sales = 345; 2011
sales = 17,735; 2012 sales = 52,835; 2013 = 48, 489).
Zachary Shahan studied that the US markets massive growth in demand rate in 2013 and
identified over 30 percent of the US electric cars and plug-in hybrid sales occurred in San
Francisco and Los Angeles (Shahan, Tesla Gigafactory for Electric Car Batteries, 2013). Electric
vehicles penetrate different cities in United States as Annex-IV.
Economies of scale: French electric/hybrid car manufacturers has been identified by Peter
(2012) as successful in Europe, and their market positioning of leader in France consent to the
car manufacturers to benefit from the economy of scale to produce Electric cars intended to the
U.S. as the French supply chain is already developed and implemented.
Tax benefits: Looking the US government move for $7,500 tax credit for EV purchases and the
movement to reduce foreign oil imports resulted in increasing purchase of EVs (Aulicino,
Waratuke, Williams, & Elliott, n.d.). The market for hybrid and electric vehicles is still largely
dependent on these premiums for helping it to grow and reach a critical size. French
12

Manufacturers involved in the sector will have the advantage of these tax shelters in U.S. (The
development of hybrid and electric vehicles, 2011).
4.2 Reactive Motives

Reactive motives indicate that the firm reacts to pressures or threats in its home market or in
foreign markets and adjusts passively to them by changing its activities over time (Hollensen,
2011).
Competitive pressures: - "The market opportunity of electric and hybrid cars in the US has
already been adopted by Toyota, resulting in a type of competitive pressure that French
electric/hybrid manufacturers could respond to. The Japanese car manufacturer Toyota
announced that one million cars were sold in the U.S in April 2011, eleven years after the Hybrid
model of Toyota was introduced in the U.S. With 3 million cars sold around the world, the U.S
market represents more than 30% of sales for the Toyota Prius. As a consequence of the above
example of Toyota, we can easily deduce that launching a hybrid car in the U.S is a foreign
market opportunity. Indeed, the American car market is strongly developed and many foreign car
manufacturers are already implanted. This highly developed market can be explained by the
social importance of cars, the accessibility of the driver license and the abundant and currently
renewed offer" (Peter, allfreepapers, 2012, p. 3).
Domestic market: small and saturated: - French EV/HEV manufacturers may be pushed into
exporting may be due to small home market potential in the future. For some firms, domestic
markets may be unable to sustain sufficient economies of scale and scope, and these companies
automatically include export markets as part of their market-entry strategy (Hollensen, 2011).
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The same author perspective indicate that if French EV/HEV manufacturers are producing
products for domestic market, saturation will be created and forced to develop strategy for
exporting products to overseas where the demand is expected to be high.
For Peter (2012, p. 4) the size of American car market benefit the French electric/hybrid car
manufacturers from the following experience curve effects due to the large market factors.
For instance, the size of the market will allow the French manufacturer to benefit of
economies of scale when manufacturing products. Let's assume that many states have
ordered cars, the general order quantity will be more important than an order for the
French car market. We can assume that the car piece are standardized
On the other hand, the distribution conditions (costs, availability, margin etc.) are more
advantageous in the U.S, simply because the number of car dealership is more much
more significant. The size of the market can also strongly increase the product growth
and expansion.
In addition to the aforementioned motives, to reduce the environmental impact and avoid foreign
oil dependency a billion dollars spent from 2008 to 2012 to create and implement public and
private battery plug in the area of San Francisco. In addition to this Californians are already
equipped with solar installations which generate electricity. Such initiative is a supporting
condition for launching of electric vehicles into U.S. could be good opportunity for French
companies (The development of hybrid and electric vehicles, 2011).
4.3 Critical barriers

One of the critical barriers that French manufacturers will face to launch EV/HEV for U.S.
market could be language barrier as it is quite hard to attract American people without strong
communication in English language. In addition the French manufacturers will need to take care
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about the American behavior, culture and how they can buy or why they are buying this car or
the other (The development of hybrid and electric vehicles, 2011).
Way of life, beliefs, and practices of human are strong attributes defining identities of the many
societies populating our universe. At the same time the unique elements that are common ground
for each society are differentiating elements, identity, about which we need to be aware of to
which we need to tailor our multi faceted engagements with each other. Luck of multi-cultural
knowledge, ignorance, and poor awareness as to the differences of culture from nation to nation
and within a nation, especially in countries like U.S. caused many multi-national companies to
develop products to fail.
Cultural background affects how consumers process advertising messages, and advertisers
recognize the purchasing power of the diverse ethnic groups in the United States. Recognizing
this explosive growth of ethnic markets in the U.S., French EV/HEV marketers should make
every effort to entice these lucrative ethnic markets and to develop the most effective marketing
strategies to appeal to ethnic consumers (Cao, 2009).
5. Company's International Competitiveness
5.1 Macro level
National strategy, success and competitiveness have a major influence on French auto
manufacturer to launch EV/HEV for the U.S. market (Peter, allfreepapers, 2012). Accordingly
French EV/HEV manufacturers national position, efficiency and competitiveness to export the
EV/HEV for U.S. market is evaluated at macro level using Porter's diamond as follow:-

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Factor Conditions: One of the key resources that French EV/HEV manufacturers possess is the
culture of innovation that put the manufacturers in a position to posses various EV/HEV firms
within the country with products which has various performance, function and efficiency.
Considering the human resource which is kind of an issue in French because employees in the
car industry are less effective as they suffer from part time employment as the economy and the
demand has been less important since 2008 crisis (Internationa marketing, 2010).
Concerning the operational facilities Peter (2012) has described the specific case of Renault Zoe
electric car company factor condition as follow: Renault's important infrastructure is available in
France and abroad, headquarters are based in Paris, and this is where important decisions are
made, Renault uses external resources and outsources its production, and the assembling and
manufacturing is made in France and European countries to keep control over the quality of
products.
Demand conditions: Among France EV/HEV the Renault Zoe was the 2nd-best-selling electric
car in Europe in 2013. Despite only being available in Europe, it was the 6th-best-selling electric
car in the world in 2013 the highest-ranking car to be available on only one continent, the
competition among EV/HEV manufacturing companies in the France market created home
market customer to pressure on firms to innovate high performance EV (Shahan,
evobsession.com/electric-cars-2014-list/, 2014).
In 2013, the French market for electric and hybrid vehicles represented 3.1% of the global
passenger car market in France. Compared to 2012, sales of electric vehicles (passenger cars and
light commercial vehicles) increased by 50% and sales of hybrid vehicles increased by 60%. In
total, 8,779 electric passenger cars were registered in France in 2013. Sales increased by more
16

than 50% compared with the 5,663 vehicles registered in 2012. Sales volumes in France were
twice as high as in Germany (3,000 cars) and Norway (2,500 cars) (France Diplomatie, n.d.).
In addition to the above advantages "public opinion is more and more concerned by sustainable
development, and particularly by the environment problem. Those concerns about sustainable
development force the French industry to improve the quality of their product and the respect of
their environment. Those improvements bring to a total improvement of their product, process
and practices which is very positive for the whole industry as it prepares to be competitive on
global level" (International marketing car industry, 2012, pp. 3-4).
In terms of electric cars, French electric/hybrid car manufacturers offering different performance
range of cars and different seat targeting all type of consumers, and offer a relatively wide range
of products. The price of the electric/hybrid cars manufacturers is affordable and its targets
environmental friendly consumers aged 20 to 60.
Related and supporting industries: French EV/HEV manufacturers have a lot of relation and
network in Europe suppliers that can produce inputs that are important for innovation and
internalization. The R&D departments of these companies enabled to produce cost effective and
good performance EV/HEV in French.
According to International marketing car industry (2012) "the French car industry has a vertical
and horizontal integration. It disposes of an important network of suppliers in all the European
Union but also a network of distributers supporting it in the European zone. Unfortunately, the
zone covered by those networks is mainly Europe and does not go that further" (p. 4).
Firm strategy, structure and rivalry: As pointed out by the International marketing car
industry (2012) "the domestic competition is pretty high between the two main French car
manufacturers; as Renault and Peugeot are two important actors on the French market.
17

Considering that all the other European and Asian companies are also very present on the French
market and appreciate because of their low prices, the domestic competitiveness is important
which means that productivity and efficiency is a part of each manufacturer of the market. In this
way, the industry, and more specifically Renault is prepared to compute internationally" (p. 4).
5.2 Meso level analysis

To analyze international competitiveness of the French auto manufacturers at the meso level,
Michael Porters Five Forces Model will be used as analytical framework. For Porter (1979) the
five Forces are competitive rivalry, buyer power, supplier power, treat of entry, and treat of
substitutes.
a) Competitive Rivalry
According to Lehman (2009) "Since there arent those many EV manufactures on the market yet,
the competitive force exerted by rivals are low. This scenario can change fast. Many car
manufactures are thinking of making EVs. Even though the entry barriers are very high, there are
still car manufactures that got a lot of the same technology to manufacture electric/hybrid cars.
The big difference, and also the key to electric/hybrid cars, is the batteries and the electric
engine" (p.42).
The other challenge as predicted by Lehman (2009) is "the batteries need to be able to hold a lot
of energy as well as being recharged fast. The electric engine has been on the market for a long
time and the technology can be bought from many different manufactures. It is of course
important to get an engine with high performance and which is able to use the power as well as
possible" (p. 42).
In order to look at the competitive landscape of the electric/hybrid car industry Karamitsios
(2013) listed out the direct and indirect competitors as illustrated in the following matrix:
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Table 2 : Direct and indirect competitors
Product Major players (or
upcoming)
Competitiveness
Electric Vehicle manufactures Think, GM Volt Direct
Hybrid cars Toyota Prius, Lexus, Fisker Direct
Conventional cars GM, Crystler, VW, Porsche Indirect
Source: (Karamitsios A. , 2013)

b) Buyer Power

Regarding the bargaining power of buyers Lehman (2009, p.45) summarized the situation as
follows "Even though the customers are the ones who bring the money, their bargaining power is
still low". For Lehman (2009) the bargaining power of customers will significantly increase from
where it was in the past (low bargaining power) if the electric/hybrid car industry is going to
grow in an increasing rate.
According to Peter bargaining power of buyers is the main threat of the car market. The same
author further explained that "on an international or national perspective, buyers have a large
choice of products, creating a highly competitive market. Moreover, today's customer
expectations are high in terms of technologies and modernity. The technologic evolution forces
car manufacturer to constantly come up with innovative product and solutions. End customers
have a relatively strong bargaining power as the used-car market is currently booming and
customers are budget-minded. As a result, we can observe the price of new vehicles strongly
decreasing and companies offer new financing methods adapted to the customer buying power. If
French electric/hybrid car manufacturers decides to export their products to the U.S, but to a
distributor, the bargaining power of the distributor will be high, as the distributor will take a
major risk by offering a product that is not present on the market" (p.12).

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c) Supplier Power
One of the suppliers of French EV/HEV manufacturers are Europe suppliers that can produce
inputs that are important for innovation and internalization and has a lot of relation and network
with suppliers.
The bargaining power of Suppliers is average as car manufacturers purchase in bulk and there is
long term relationship with supplier. But this scenario will change to high bargaining power of
supplier in case the supplier able to provide high technology equipment and consistently meet
order deliveries (Peter, allfreepapers, 2012).
d) Treat of Entry
For Lehman (2009) "the complementary of the electric/hybrid industry are the power industry as
well as the oil industry. The power industry has a great interest in the electric/hybrid becoming a
success this will sell more power. On the other hand is the oil industry not that interested in this
new vehicle. This will affect one of their main sources of income" (p. 44).
The potential new entrants and their respective power as indicated by Aulicino, Waratuke,
Williams, and Elliott, (n.d.) is that new entrants with similar technologies has low power. On the
other hand new entrants with disruptive technologies have high power, these include: Large
mass-market manufacturers (Chevrolet, GM, Toyota), Luxury performance sports cars (BMW,
Porsche, Mercedes), other boutique manufacturers (Italians and Aston Martin). Besides that
French electric/hybrid car manufacturer is also facing some challenges from the currently
coming none fossil fuel technologies like hydrogen and natural gas (Hall, 2013).
The challenges mentioned above are further exacerbated by factors like strategic shift towards
gasoline electric hybrids; the promising believes for fuel cells than battery electric cars; and the
obvious short comings i.e. driving range, cost and recharging time of electric vehicles is putting
20

them not to become a natural replacement for the conventional cars (Shirouzu, Kubota, &
Lienert, 2013).
e) Treat of Substitutes

According to Lehman (2009) "The other force which is very strong is the substitute products.
Most people still choose to buy a normal car, which of cause makes the car industry the largest
competitor. It is because of the substitute products that the competitive force all together is high
and still makes the industry less attractive. Firm in the industry should at all time pay attention to
the competitive force, since it can change at all time" (p.46).
On top of the aforementioned situation the following are some of the major indications for the
increasing treat of substitutes for French electric/hybrid car manufacturers: First there is a
continues development on solar cell design and car power supply requirements like heater or air-
conditioning (Bellis, 2014). Second there is a strategic shift by automotive executives in Asia,
Europe, and North America to new alternative energy sources like hydrogen. Finally the move
by Nissan to follow its rival Toyota in changing its power generation for the next big green-tech
innovation of hydrogen to electricity and the new alliances of Toyota and BMW to develop
hydrogen powered fuel cell cars are the major indicators of aggravated treat for new technology
(Shirouzu, Kubota, & Lienert, 2013).
To substantiate the analysis of the five forces to look at the industrial environment of
electric/hybrid cars, the three types of competitors namely Immediate, Impending and invisible
competitors of French electric/hybrid car manufacturer are concisely summarized by Aulicino,
Waratuke, Williams, & Elliott (n.d.) in the following illustration:




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Table 3: Competitor Environment
Immediate Competitors
BMW, Nissan Leaf, Daimler, Lexus, Audi, Fiat, Think, Aptera, Fisker, Coda, Zap , Volkswagen
and Volvo Direct competitors in EV market
Toyota Hybrids successful but not completely green- Direct competitors in Hybrid car market.
Smart Successful - Direct competitors in Hybrid car market
Impending
Ford, GM, Hyundai, Honda, Etc. Potential competitors
Invisible
As EV industry grows, more competitors will enter market
New startups will appear
Disruptive technologies will appear
Source: (Aulicino, Waratuke, Williams, & Elliott, n.d.)
5.3 Micro level
Supplier- The French electric/hybrid car industry has a vertical and horizontal integration. These
French EV/HEV manufacturers have a lot of relation and network in all Europe suppliers that
can produce inputs that are important for innovation and internalization. In addition to this, the
French electric/hybrid car manufacturers have also a network of distributers supporting it in the
European zone. However; the zone covered by those networks is mainly Europe and does not go
that further.
The R&D- The departments of the French EV/HEV companies enabled to produce cost effective
and good performance EV/HEV in French. This can be exemplified as stated in Table 1 above;
the travel range (kilometer) with single battery charge of various vehicles produced by different
French electric/hybrid car manufacturers indicate as there is extensive R&D to upgrade the
performance of EV/HEV.
Peter (2012) described that among French EV/HEV manufactureres "Renault's value chain is
well implanted and efficient in France and its structure is part of its success in Europe market.
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Renault strongly invests in research and development in order to provide constant innovations.
The production is mainly outsourced, but the assembly is made in France and over Europe"
(p.12).
Marketing & Sales- The same author further explained taking as example the Marketing &
Sales of French car Manufacturer Renault as it has important marketing budgets and uses
advertisement as a competitive tool. Regarding sales and service, Renault owns its own car
dealership in France, and some other have the exclusivity to sell Renault cars. This way, the
company has a maximum impact in the market and controls its sales and customer service in
official dealerships.
When we look at another French car manufacturer the Peugeot iOn is really appreciated in
France. All customers like this brand for its history and innovative side.
According to Peter (2012) as international marketing plan for the launch of an electric / hybrid
car by a French auto manufacturer in the U.S. market should consider the following points:-
"In the U.S, the company would have to review is marketing and sales process of the
value chain. Indeed, a French manufacturer has no presence in the American market and
car companies have different approach of marketing and sales in the United States.
Marketing techniques are the core solution to generate sales as well as customer retention
and customer service. Customer relationship management is much more evolved in the
U.S than it is in France. In order to best deal with these differences, French
Manufacturers should establish a strong competitive analysis on competitors, a behavior
analysis on customers and an in-depth bench-marking about American marketing
strategies. This way they will benefit from the U.S market knowledge accumulated in
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research marketing and combine it with their national skills of leader and develop a
potential sustainable competitive advantage"(p.12).
"More precisely, the competitive benchmarking should be conducted from two
perspectives. First, an analysis of each step of the competitions value chain in order to
distinguish the competition core competences. This will allow a French electric/hybrid
car manufacturer to understand the competition strengths in terms of production and
supply. The second benchmarking perspective should be conducted on customers, their
expectations and behavior. This benchmark will allow a French electric/hybrid car
manufacturer to understand the customer mind-set and its perceived value. As a result, a
French electric/hybrid car manufacturer will be able to adapt its upstream and
downstream strategy in order to compete with American car manufacturers and offer an
adapted value proposition to the market" (p.13).
Based on trough analysis of macro, meso and micro level for launching an electric / hybrid car
by a French electric/hybrid car manufacturer for the U.S. market allows us to state points that
are believed to be very critical factors for the success of the company and which will give hints
for the American car market is summarized as follow:
Apply creative promotional campaigns to further enhance brand recognition and
positioning as brand image has a strong importance in the United States.
Further capitalizing on innovative corporate culture and strong R&D capabilities to
reduce charging time for batteries and to increase the range EV/HEV can go in a single
charge, aiming to gain competitive advantage.
Try to minimize possible supplier problems to accommodate the future expected
significant increase in demand through backward integration.
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Supply Chain Management: Competitive prices due to reduction of costs linked to the
supply chain management and efficiency.
Diversification Strategy: Based on alliances and horizontal collaboration.
Understanding of the market: Based on marketing research including: customers,
competition, target culture and behavior.
6. Political and Economic Barriers /with respect to export of electric/hybrid cars to the
U.S.
6.1 Political Barriers
From a political perspective, several barriers have to be considered when exporting cars: "The
American government is directly involved in the automotive industry. If we take the example of
General Motors one of the top 3-car company of the U.S treasury, the government owns 33% of
the company. (Brendan Moore, 2011). It allows us to assume that the government has a certain
control over American corporations. Another example supporting this statement is the
investments made by the U.S Government in favor of Chrysler. Even though the government
recently ended its investments, it shows that the American government is supporting national car
companies. As a result, the exportation of a French electric/hybrid cars in the U.S might be
complicated as the government has more or less a market control. We can also notice that the
American government has a strong influence on the legal system and it could affect a French
electric/hybrid car manufacturer in its launch" (Peter, allfreepapers, 2012, p. 4).
According to International marketing car industry (2012) the following are the political barrier
that a French car manufacturer should consider to launch an electric/hybrid car in the U.S.
United state government restriction:- Every government needs restriction in order to
regulate the tariff, take care of their populations, etc
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National Export policy: - Every government needs to have some rule in order to
regulate the export in the country in order to reduce the different risks. We need to take
care about those policies and be focus on it.
Foreign exchange controls imposed by the American Governments: - all the products
are not accepted in the America governments. If a French company wants to launch an
electric/ hybrid car, it will be important to know if it can build it in France or if there is
something to change on the car (environmental aspect, performance, etc)
Exchange Controls: - The American Government, like every government, controls the
product that are coming in the country.
Labor restrictions strong union: - The labor low is different in different country and the
French car manufacturer should understand those restrictions to launch EV/HEV product
in U.S.
Change of Government party: - in U.S. there are two main parties; the republican one
and the democratic one. Both are not apply the same policy. If a product needs to be
launch on the American market, the company will need to be focus on which party is the
government and adapt itself to that and the restriction in place.
6.2 Economic Barriers

One of the economic barriers that will happen if the French car manufacturer chooses the
exportation of electric/hybrid car to penetrate the U.S. market is the problem of currency. The
difference in currency of the two countries will result a problem in the accountancy, because the
production would be in Euros and the sales in Dollars. That would be, and a problem of higher
cost of production than cost of goods sold. In addition one of economic barrier is the distributor
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network. A French car manufacturer does not know anything about the distribution network in
the U.S.
Peter (2012) explained taking one of the French electric car manufacturer Renault " if it exports
its electric cars in the U.S, it will have to sell cars at a much higher price in order to make the
same benefit as in France as 1 equals $1.26. If we take an example of Renault selling a car
10,000 in France, the company will have to sell it for $12,667 in order to make the same profit
on the car sold. This might represent a difficulty as the car market is competitive in term of
prices and the company could lose potential market share if setting high prices, making cars
unaffordable" (Simon Kennedy and Patrick Donahue, as cited in Peter, 2012, p. 5).
Peter (2012) differentiates other barriers to international trade of cars. These include the shipping
costs, risks and other concerns of international trade. Related to these risks, some of the
economic barriers are more specifically distinguish in the following categories:
Trade barriers: "Regarding the economic barriers, it could be hard for a French company to
compete a huge American company/competitor like General Motors that is appreciate in all the
United States. Because of that, the American people are not waiting any foreign competitors"
(International marketing car industry, 2012, p. 7).
Tariffs barriers: Cars imported in the U.S are dutiable and it represents an additional potential
cost. A French electric/hybrid car manufacturer has to be aware of these potential costs and
highly informed about American standards and regulations in terms of foreign cars (Peter,
allfreepapers, 2012, p. 5).
Non-Tariffs: "The American government has specific regulations that are different from France
standards. Agencies such as EPA (Environment Protection Agency) and DOT (Department of
Transportation) provide information about requirements of the U.S Customs Service. These
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agencies provide information about & quota; safety standards, bumper standards, and air
pollution control (emission) standards & quota;" (Foreign-Born, 2010 as cited in Peter, 2012, p.
6). The above agencies also require some administrative forms to be completed, making the
administrative process longer (Peter, allfreepapers, 2012)
7. The Influence of Culture on the International Marketing Strategy

To analyze the influence of culture on the international marketing strategy to launch EV/Hybrid
cars by French manufacturer for the U.S. market, Hofstede and Hall models are adapted as points
of reference as follow:
7.1 Hofstede's Model

According to Hofstede (as cited in Peter, 2012) different cultures have different perceptions and
interpretations of things. As illustrated by Peter (2012, pp. 6-7) Hofstede's model of national
culture separates five different aspects as follow:-
i) Power Distance: we can consider that some inequality can be considered between
French and Americans. In physical and educational terms, both cultures have different values
and principles. Even though the politeness is strongly present in the U.S, a certain distance has to
be respected.
ii) Uncertainty Avoidance: is much more present in the U.S as it is in France. In the U.S,
rules, norms and laws are strongly approved and respected whereas in France, people often
disagree an uncertainty is more frequent. In the U.S, avoiding uncertainty results in strong
planification and coordination. This aspect might cause some cultural misunderstanding and
tensions between both cultures.
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iii) Individualism: is present in the US culture, whereas in France, the culture can be
considered as group oriented or community. The social status and person is considered and
rewarded in the U.S, while in France, groups and communities are favored.
iv) Masculinity: is strongly present in the U.S, especially in the business environment where
success, salary, cars, watch and social representation matter a lot. Masculinity is less present in
France, where talking about income is often perceived as rude. Moreover, the feminine role of
women in business is being defended and increasing in France (unions).
v) Time perspective: is completely different in the French and American culture. Indeed,
the American culture is focused on the future and often projecting on future project, forecasts
and expansion. On the other hand, the cultural and historical background of France is part of the
nation pride and French often refer to the past as a reference. Protectionism of the historical
French culture and protocol is strongly implemented and installed in the French values. This
perspective might cause some issues when discussing future plans, Americans can be perceived
as too confident and optimistic, whereas French might be focused on analysis based on the past.
7.2 Edward Hall

Based on Hall's Model, Peter (2012) explained communication context and the Customer-
oriented culture aspects as follow:-
a) Hall's communication context

According to Hall's (as cited in Peter, 2012) "communication context, the French culture can be
considered as a high context culture whereas the American culture as a low-context culture. As a
result, many cultural factors differ between both cultures, leading to potential cultural clashes.
Elements such as time, money, relationships, business, communication, beliefs, values and
norms constitute strong cultural differences. For example, it is common measure to develop
29

relationship at work in France and being 5 minutes late is tolerated. In the U.S, business relations
are based on deals and achievements, and punctuality has a major importance in business affairs.
These two examples highlight the cultural differences that might lead to cultural
misunderstanding and inefficient business relationships"(pp. 7-8).
The same author further identified that If French EV/hybrid car manufacturer launching its
electronic cars in the U.S, the business relationships might be problematical and build barriers to
success. To have knowledge of these cultural differences will smooth the process of conducting
international business.
b) The Customer-oriented culture
According to Peter (2012) "The American culture is oriented on customer service and its quality.
Indeed, companies view customer relationship management (CRM) as a way to develop
customer loyalty and improve customer service. As a consequence, the approach of personal
selling is very different from one culture to another. In France, personal selling is much more
impersonal and sellers are only here if the customer requires any information. In the U.S, we fall
under the impression that the seller is here to guide the customer through the brand, its product or
services and convince him of the company's products. Personal selling in the U.S will oriented
on communication and customer attention, whereas in France, the customer first makes his own
opinion of the product, and then the communication will go from the customer to the seller. In
the U.S, the communication is more like a dialogue and starts from the seller to the customer.
French sellers are convinced that if the product does not meet the customer's expectations, then
he will not be likely to buy it. In the U.S, even though the product does not meet the customer's
expectations, the seller will try to convince the customer with commitment and defend its
product/brand" (p.8-9).
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As a consequence, a French customer in the U.S will feel stalked whereas the American
customer in France will feel abandoned. French EV/Hybrid car manufacturer needs to focus on
these aspects if implementing a distribution center, a license or any type of sales that could
involve a customer.
8. The type of market entry modes that the French car manufacturer should consider

According to Hollensen, (2011) entry mode is an institutional arrangement for the entry of a
companys products, technology, human capital and services into a new foreign market. The
main types of entry modes are export, intermediate and hierarchical modes. The same author
explores these types of entry modes as follow:
i) Export modes: "With export entry modes a firms products are manufactured in the
domestic market or a third country and then transferred either directly or indirectly to the host
market. Export is the most common mode for initial entry into international markets. Sometimes
an unsolicited order is received from a buyer in a foreign country, or a domestic customer
expands internationally and places an order for its international operations. This prompts the firm
to consider international markets and to investigate their growth potential. Exporting is thus
typically used in initial entry and gradually evolves towards foreign-based operations. In some
cases where there are substantial scale economies or a limited number of buyers in the market
worldwide (e.g. for aerospace), production may be concentrated in a single or a limited number
of locations, and the goods then exported to other markets" (Hollensen, 2011, p. 335).
The commercial activity of export modes is very important as it allows boosting an economy
with highlighting the companies and its country efficiency in a global world.

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ii) Intermediate entry modes: "are primarily vehicles for the transfer of knowledge and
skills between partners, in order to create foreign sales. In addition to this there is no full
ownership (by the parent firm) involved, but ownership and control can be shared between the
parent firm and a local partner. This is the case with the (equity) joint venture" (Hollensen, 2011,
p. 356).
Hollensen (2011) explaned the most relevant intermediate modes as follow:
a) Contract manufacturing: is outsourced to an external partner, specialized in production
and production technology. It enables the firm to have foreign sourcing (production)
without making a final commitment.
"Management may lack resources or be unwilling to invest equity to establish and
complete manufacturing and selling operations, but contract manufacturing keeps the
way open for implementing a long-term foreign development policy when the time is
right. These considerations are perhaps most important to the company with limited
resources. Contract manufacturing enables the firm to develop and control R&D,
marketing, distribution, sales and servicing of its products in international markets, while
handing over responsibility for production to a local firm" (p.356).
b) Licensing: The licensor gives a right to the licensee against payment, e.g. a right to
manufacture a certain product based on a patent against some agreed royalty. It is another
way in which the firm can establish local production in foreign markets without capital
investment (p.358).
c) Franchising: The term franchising is derived from the French, meaning to be free from
servitude.
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In Franchising, the franchisor gives a right to the franchisee against payment, e.g. a right
to use a total business concept/system, including use of trade marks (brands), against
some agreed royalty (p. 361).
"Franchise activity was almost unknown in Europe until the beginning of the 1970s. The
concept was popularized in the United States, where over one-third of retail sales are
derived from franchising, in comparison with about 11 per cent in Europe" (Young et al.,
1989, as cited in Hollensen, 2011, p. 361).
A number of factors have contributed to the rapid growth rate of franchising. First, the
general worldwide decline of traditional manufacturing industry and its replacement by
service-sector activities has encouraged franchising. It is especially well suited to service
and people-intensive economic activities, particularly where these require a large number
of geographically dispersed outlets serving local markets. Second, the growth in
popularity of self-employment is a contributory factor to the growth of franchising.
Government policies in many countries have improved the whole climate for small
businesses as a means of stimulating employment
d) Joint venture: is an equity partnership typically between two partners. It involves two
parents creating the child (the joint venture acting in the market) (p.366).
Hollensen, (2011, p. 366) pinted out that there are a number of reasons setting up joint ventures:
Complementary technology or management skills provided by the partners can lead to
new opportunities in existing sectors.
Many firms find that partners in the host country can increase the speed of market entry.
Many less developed countries, such as China and South Korea, try to restrict foreign
ownership.
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Global operations in R&D and production are prohibitively expensive, but are necessary
to achieve competitive advantage.
In joint venturing companies put their knowledge, technologies and resources to reach objectives
that each company could not have reached alone. This also allows the companies to share the
risks and profits that the joint venture engenders (International marketing car industry, 2012, p.
6).
iii) Hierarchical entry mode: is the final group of entry modes is the hierarchical mode,
where the firm completely owns and controls the foreign entry mode. Here it is a question of
where the control in the firm lies. The degree of control that head office can exert on the
subsidiary will depend on how many and which value chain functions can be transferred to the
market. This again depends on the allocation of responsibility and competence between head
office and the subsidiary, and how the firm wants to develop this on an international level
(Hollensen, 2011, p. 386).
If a producer wants greater influence and control over local marketing than export modes can
give it is natural to consider creating their own companies in the foreign markets. However, this
shift involves an investment, except in the case of the firm having its own sales force, which is
considered an operating cost (Hollensen, 2011, p. 386).
We have seen the main groupings of entry modes available to companies that wish to take
advantage of foreign market opportunities in the aforementioned section.
A firms choice of its entry mode for a given product/target country is the net result of several
conflicting forces. The need to anticipate the strength and direction of these forces makes the
entry mode decision a complex process with numerous trade-offs among alternative entry modes
( (Hollensen, 2011, p. 322).
34


Generally speaking the choice of entry mode should be based on the expected contribution to
profit. This may be easier said than done, particularly for those foreign markets where relevant
data are lacking. Most of the selection criteria are qualitative in nature, and quantification is very
difficult.
It cannot be stated categorically which alternative is the best. There are many internal and
external conditions which affect this choice and it should be emphasized that a manufacturer
wanting to engage in global marketing may use more than one of these methods at the same
time. There may be different product lines, each requiring a different entry mode.
Accordingly the following entry mode is suggested based on the internal & external factors as
follow:
French Electric /Hybrid car manufacturers are limited in France market only. As a result French
manufacturers could choose export entry modes to penetrate the U.S. market by producing
products in France that avoid high cost of delocalization. The cost incurred during exporting is
for transport, transport insurance and change in rate. This type of entry modes is advised for
French electric/hybrid car manufacturers that have limited resource. For some firms, domestic
markets may be unable to sustain sufficient economies of scale and scope, and these companies
automatically include export markets as part of their market-entry strategy. As the firm grows it
will increasingly use the hierarchical model.
Peter (2012) described that taking into account exportation as a market entry strategy is a valid
option for French electric/hybrid car manufacturers to limit their investment by exporting their
products and it will allow the company to analyze customer reaction and limit expenses and
implication. The same author further explained that exporting a limited number of Renault's ZE
35

would be a way to test the market reactivity and determine a future strategy. Nevertheless, this
entry strategy would be unproductive as the market competitiveness as intense.
The French EV/HEV manufacturers do not have an international experience. International
experience reduces the cost and uncertainty of serving a market, and in turn increases the
probability of firms committing resources to foreign markets, which favors direct investment in
form of wholly owned subsidiaries (hierarchical modes). These modes could be choosing by
French manufacturers to acquire assets such as plants and production equipment in the United
States. In consequence, the company is producing in U.S. and sells its product in the same
country's market. This could allow French manufacturer to control everything from the
beginning to the end, and to reduce the cost of car, as cars would be produced in dollar and sold
in dollar, which would not be the case with using the exporting solution for example (produced
in Euros and sold in Dollar).
United State is large sized country in the world and the rate of electric car market growth is high.
According to Hollensen, (2011) the larger the country and the size of its market, and the higher
the growth rate, the more likely management will be to commit resources to its development, and
to consider establishing a wholly owned sales subsidiary or to participate in a majority-owned
joint venture.
I addition to this a joint venture with an American car manufacturer to penetrate the market is
easier, because the car industry in U.S. is under the state protection, and that can be hard to
compete (International marketing car industry, 2012).
As declared above, developing horizontal collaborations will benefit French manufacturers when
entering the American market with its new electric cars. Peter (2012) explained taking the case
of Renault that establishing a joint venture with an American car manufacturer, Renault transfer
36

the technology and models to the U.S. and the American corporation helps to introduce market
and distribute the models. In addition, this type of alliance will also assist the company to be
accepted by the competition, the government, and most importantly, customers. Using the joint
venture strategy will also allow French EV/HEV manufacturers to keep a minimum of control
upon their products.
9. International Product Life-Cycle and its implications for the electric /hybrid car
9.1 I nternational Product Life Cycle (I PLC)
According to Hollensen (2011) the IPLC theory describes the diffusion process of an innovation
across national boundaries. As illustrated Figure 1, for each curve net export results when the
curve is above the horizontal line; if the curve is below the horizontal line net import results for a
particular country.
The international product life cycle is a theoretical model describing how an industry evolves
over time and across national borders. This theory also plans the development of a companys
marketing program when competing on both national and foreign fronts. International product
life cycle concepts combine economic principles, such as market development and economies of
scale, with product life cycle marketing and other standard business models (Wisegeek, 2014).
The IPLC is further summarized by (Professor Cooney, 2014) as follow:-
Describes diffusion of an innovation across national boundaries.
Demand grows first in innovating country and is then exported.
Eventually demand grows in Low Developing Countries (LDCs).




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Figure 1; IPLC curves

Source: Power point on international marketing (Onkvisit and Shaw, as cited in Professor
Cooney, 2014, p. 256)

According to Hollensen (2011) when expanding the concept of the PLC to international markets
two different approaches appear summarized as follow:
a. International product life cycle (IPLC) a macroeconomic approach

IPLC is considered from a macroeconomic perspective that views typically, demand first grows
in the innovating country (here the United States). In the beginning excess production in the
innovating country (greater than domestic demand) will be exported to other advanced countries
where demand also grows. Only later does demand begin in less developed countries.
Production, consequently, takes place first in the innovating country. As the product matures and
technology is diffused production occurs in other industrialized countries and then in less
developed countries. Efficiency/comparative advantages shift from developed countries to
developing countries. Finally, advanced countries, no longer cost-effective, import products from
their former customers.

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b. PLCs across countries a microeconomic approach:

In foreign markets the time span for a product to pass through a stage may vary from market to
market. In addition, due to different economic levels in different countries, a specific product can
be in different PLC stages in different countries. Figure 2 shows that the product (at a certain
time, t1) is in the decline stage in the home market, while it is in the maturity stage for country A
and in the introduction stage for country B.
Figure 2: PLCs of different countries for a specific product

Source: Power point on international marketing (Professor Cooney, 2014, p. 258)

The four primary elements of the international product life cycle theory are: the structure of the
demand for the product, manufacturing, international competition and marketing strategy, and
the marketing strategy of the company that invented or innovated the product. These elements
are categorized depending on the products stage in the traditional product life cycle (Wisegeek,
2014).
39

The stages of the basic product life cycle, Introduction, growth, maturity, and decline are
explained as follow:-
The I ntroduction Stage of Product Life Cycle
The introduction phase of the product life cycle (PLC) can be explained from technology,
marketing and production aspects by Grant, Armstrong and Kotler (as cited in McGrath, 2012)
as follows:-
From technological perspectives the introduction phase of product life cycle is characterized by
emerging technology, early technology S-curve, and state of the art but buggy market
experiments of lab results. In addition to that the marketing practice is aiming at creating product
and technology as well as establishing legitimacy, innovative customers low level of
performance/price ratio due to high cost driven prices, low sales and revenue volumes, negative
profit margins for true long term strategies and positive profit margins for hit and run strategies
as well as few incompatible competition that shape the opportunity for the future.
In addition to the aforementioned points during the introduction stage, the product is new and not
completely understood by most consumers. Customers that do understand the product may be
willing to pay a higher price for a cutting-edge good or service. Production is dependent on
skilled laborers producing in short runs with rapidly changing manufacturing methods. The
innovator markets mostly domestically, occasionally branching out to sell the product to
consumers in other developed countries
Finally this phase is characterized by high production unit costs, low scale and lack economic of
scale, job shape batch production process selection and fixed position process. International
competition is usually nonexistent during the introduction stage of the international product life
cycle.
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The Growth Phase of Product Life Cycle
The growth phase of the product life cycle can be explained from technology, marketing and
production aspects by Grant, Armstrong and Kotler (as cited in McGrath, 2012) as follows:-
Looking at the technological conditions of this stage it is characterized as pacing, rising S-
curves, and incompatible product variations until dominant design appears.
Gaining market share by attracting customers that are early adopters is one aspect of the
marketing condition that typically explains this stage. In addition to that when we look at the
price/performance aspect of marketing, the growth stage is typically characterized by enhanced
performance that emanate from rising S-curves. Increasing sales/revenue, positive and rising
wild profit variations that establish common profitability in addition to signaling new
competition are the other marketing dimensions that are typical to this stage of product life cycle.
During the growth stage competitors in developed markets begin to copy the product and sell
domestically. These competitors may also branch out and begin exporting, often starting with the
county that initially innovated the product. The growth stage is also marked by an emerging
product standard based on mass production. Price wars often begin as the innovator breaks into
an increasing amount of developed countries, introducing the product to new and untapped
markets.
Finally, looking at the production unit costs, process selection, and process layout; falling in
transition, batch mass production, and process are the typical characteristics that represent the
PLC respectively.



41

The Maturity Phase of Product Life Cycle
The maturity stage the product life cycle can be best explained by taking into account
dimensions of technology, marketing, customers, performance/price, sales/revenue, competition
production unit costs, process selection and process layout as it has been illustrated by Grant,
Armstrong and Kotler (as cited in McGrath, 2012) as follows:-
Regarding technology the maturity phase is identified by the condition of having key technology
and the technology S-curve breches their natural limits. At this stage there are sophosticated
consumers who have high quality expectetions accordingly at this stage many competitors run
out of business if they are not in a position to satisfay the sophesticated expectetions and
preferences of consumers.
In this phase of the product life cycle the marketing effort of business organizations focuses on
defending their market share in order to maximaize profit. This is done by shifting their
marketing efforts from early adopters to the mass consumers, with enphasis on repeate purchase
if possible. This implies that the performance/price ratios are higher and highest due to the
exsitance stable performance at lower prices associated with the exisitance of high production
rates and high demand.
This stage of the product life cycle also characterised by the precence of many but similar
competitors with no dominet better design and products mostly differ in some product features
which has little in differnciating the product of one player from another. This implies that the
profit margin at this stage is increasing at decrising rate then stagnates.
At some point of this maturity stage of the international product life cycle and even the global
marketplace becomes saturated, meaning that almost everyone who would buy the product has
bought it, either from the innovating company or one of its competitors. Businesses compete for
42

the remaining consumers through lowered prices and advanced product features. Production is
stable, with a focus on cost-cutting manufacturing methods, so that lowered prices may be passed
on to value-conscious consumers.
Finally when we look at the production unit costs in this stage we found that there is high
economics of scale and economics of scope which implies that there is high asset utilization and
this is supported by the exisitance of a mechanized mass production process to satisfay
customers at mass customization which is made by making the process layout to be configered
based on product that can accomodate fleaxible manufacturing.
The Decline Phase of Product Life Cycle
Like the other phases as identified by Armstrong and Kotler (as cited in McGrath, 2012), this
stage of the product life cycle can be best explained by taking into account dimensions of
technology, marketing, customers, performance/price, sales/revenue, competition production unit
costs, process selection and process layout as follows:-
The type of technology that exist at this stage can be explained differently by different authors
for example degraded by Burgelman, Kosnik, and Van Den poel (1988); S-curves reaching at
the top which implies a need for discontinuity by Foster and Schilling (1986a; 1986b); and
rationalized to clear remaining markets by Grant,2002 Armstrong, and Kilter, 2002.
This phase of the product life cycle is a direct opposite of the growth phase. At this phase the
marketing effort of the company is directed at the existing product rather it has to do with the
development of a completely new product in other words products at this stage identified as cash
caws in which we harvest cash to invest in next generation products. The customers at this phase
are consequently the late comers or lagers that are identified by socio economic and
43

psychological characteristics of markets and niches (for example the market for type writers and
black and white TV's).
This stage is also characterized by a declining sales/revenue and a performance/price ratio which
is high but stable though continued profitability is not guaranteed as the S-curves reach near
natural asymptotes. This implies the profit margin is probable based on the market niche served.
And the competition in this stage is among survivors whose main objective is directed towards
recovery and rationalization.
Product innovators must guard both foreign and domestic markets from international
competition, while finally breaking into riskier developing markets in search of new customers.
When the product reaches the decline stage, the innovators may move production into these
developing countries in an effort to boost sales and keep costs low. During decline, the product
may become obsolete in most developed countries, or the price is driven so low that the market
becomes close to 100% saturated.
Finally when we look at the production unit costs at this stage as long as capacity is utilized it is
generally low. This stage is also identified by batch or mass production process depending on the
market niche served; hence it may be supported by process layout based on process or flexible
manufacturing.
9.2 PLC I mplications for the Electric/Hybrid Car Models
Based on international PLC, electric/hybrid cars are still in the introduction phase. The company
has to increase their sales revenue and improve their profitability by introducing their products to
international market. Traditionally, the introduction phase of PLC will have justified their
investment and then the company will have maximized values in later stages how they manage
and arrange their effort on product development. Electric/hybrid car manufacturers should align
44

their product strategy throughout all the phases of life cycle across the key strategic dimensions
stated below:-
Strategic Implications of the Product Life Cycle at I ntroduction Stage
At this stage of the product life cycle "A major issue for strategists is to understand the dynamics
of how consumers adopt new products or from the technology point of view, how technology
diffuses" (McGrath, 2012, p. 30). This implies that for a new product development to be
successfuly comercialized firms should understand the needs and preferences of the customers
inorder to solve custumers problem or to create them opportunities through the new technologies.
Strategic Implications of the Product Life Cycle at Growth Stage
According to McGrath (2012) Operations planning should begin concomitantly with marketing
during new product development, as part of an overall strategy because it is during the growth
phase that any lack of previous planning will become obvious and be potentially disastrous to
overall product success.
The same author emphasized that without equivalent and similar developments in the evolution
of process technologies like production forecasting, facility capacity, facility location, process
selection, and facility layout, it is not possible for a product technology to succeed as a total
product in the market place.
Strategic Implications of the Product Life Cycle at maturity Stage
In the maturity stages it is strategically unjustifiable to commit investment in innovations. This is
supported by agency theory which provides a base for free cash flow hypothesis i.e. as business
reach maturity stage they are more likely to have huge amount of free cash flow, accordingly
organizations should milk the cash caw in the maturity stage to enhance their return on
45

investment that has been incurred for the technology that is introduced at the initial phase and
reached its maturity stage (Chowdhury, 2004).
Strategic Implications of the Product Life Cycle at Decline Stage
Firm's decrease their investment in research and development i.e. there is little
innovation in the existing product and technology rather they look to invest on
completely new products.
Firm's engage in cash caw i.e. harvest cash to invest in next generation products.
Firm's are concerned more about the late comers or laggards.
When we look at the PLC of EV/HEV manufacturers in French - Technology is emerging for the
electric vehicles and it is at introduction stage of product innovation. Production unit cost is high,
low scale of economics due to the beginning of the Electric manufacturing in French.
Competition with similar technology is in introduction phase-head to head competition between
EV manufacturers and product is at introduction phase.
Peter (2012) asserted based on Renault's case of launching Renault's ZE electric cars in the U.S
that "the IPLC could have two growth curves; one in France and one in the U.S. The product is
new on the market and it still at an early growth stage in France. In a few years, we could
consider another growth curve starting at the level of the first maturity curve. This second growth
would be explained by the success of the ZE cars in the U.S, while the French market is already
reaching the maturity" (p. 15).
French manufacturers launching of electric/hybrid cars in the U.S, the IPLC could have two
growth curves; one in France and one in the U.S. The product is new on the market and it still at
an early growth stage in France. In a few years, we could consider another growth curve starting
at the level of the first maturity curve. This second growth would be explained by the success of
46

the French electric/hybrid cars in the U.S, while the French market is already reaching the
maturity.
10. Conclusions and Recommendations
10.1 Conclusions
One of the policy options pursued by the United State federal government is to establish various
incentives for investors in the green-technology through the adoption of electric cars. Similarly
the implementation of an environmentally responsible public policy at the national and local
level and the supply of vehicles produced by French manufacturers have enabled France to
become the largest electric vehicle market in Europe. Among the Electric Vehicle manufacturers
in French, Renault has played a pioneering role to achieve this top ranking.
Customers are increasingly demanding fuel saving cars. As a result, large numbers of car
manufacturers are now looking into solutions that involve electrifying their vehicles. But not all
car manufacturers are necessarily using the same strategies and have not aggressively moved to
electric cars. The electric cars still cannot compete with the long range of gasoline powered cars
and the fast refill times. However, government mandates to increase the taxation for petrol and
strict regulation in pollution will help the development of electric cars in the future.
An analysis of Porter's 5 forces model allows us to affirm that the international car market is
highly competitive and that current manufacturers are in an intense rivalry to find the best
innovation of electric/hybrid cars and conquest the most customers or distributors. As the
environmental awareness for green technology in U.S. is increasing from time to time in addition
to the economic benefit that they expect to get from decreased cost of diesel over time, the
bargaining power of electric/hybrid car consumers is not going to be very significant.
47

There is a lot of car market opportunity in U.S., from the number of potential customers to the
consumption habits of the people. However, it is not easy to penetrate this market with a French
manufactured electric car due to the existence of various economical and political barriers that
break the implementation of marketing plan of a French manufacturer launching electric/hybrid
car for the U.S. market. A French EV/HEV manufacturer must benchmark and study a lot of the
U.S. culture, legislation, and economy, to see if they have a chance to succeed in this particular
sector and country.
The electric vehicle is still in the introduction phase. In 2009, the market share was only in the
single digits for several major markets (e.g. 7% in Japan and 3% in U.S). The projected market
share for 2020 will grow to 13 percent in United States.
When we look at the International Product Life Cycle of EV/HEV manufacturers in French -
Technology is emerging for the electric vehicles and it is at introduction stage of product
innovation. At this stage of the product life cycle a major issue for strategists is to understand the
dynamics of how consumers adopt new products or from the technology point of view, how
technology diffuses.
The general lesson that we can get from generic pattern of international product life cycle is that
at the different phases of the life cycle there are different strategic decision that organization to
pursue in order to be competitive.
The IPLC of electric cars can strongly vary, as it is an innovation that is needed today and still
will be over the next years. The particularity of this product and the long-term investment of
companies in electric and hybrid technology will strongly influence the PLC curve and hopefully
highlight the beginning phases.
48

From one of French electric vehicle manufacturer Renault's perspective, looking the national
market in France with its electric cars is justified as it has a position of leader and has a high
market share. On the other hand, exporting its ZE range of products in the U.S might be a more
difficult challenge when we compare the cost i.e. the base Nissan Leaf costs in France is 18,090
but Renault Zoe 20,900.
Organizations should follow dynamic or flexible strategies rather than becoming static and try to
address all conditions using only one generic strategy. For example if you consider integration
strategies at some level of the industry life cycle licensing or joint venture may be appropriate
but in some other phases it may be appropriate for companies to follow highest level of
integrations like vertical or horizontal integrations, merger and/or acquisition.
This paper discuss that the international marketing plan of a French manufacturers launching its
electric/hybrid cars in the U.S market. Based on the detailed analysis in this paper it will be
strategically and financially sound for a French electric/hybrid car manufacturer to consider to
internationalize its products using a Joint Venture so as to accomplish its marketing plan. In
addition to this the paper addresses one possible avenue for a French EV/HEV makers as mass
marketing initiative of the company to penetrate the U.S. market. Similarly, forming a Joint
Venture with American car manufacturer will help the firm also to gain additional revenue and
synergies that will contribute to the long term success of a French EV/HEV core mission of
manufacturing and selling industry leading electric vehicles.
Considering the advantage of partnership with an American car manufacturer, a French EV/HEV
manufacturer products should be perceived as qualitative, affordable and innovative in terms of
electric technology. Concerning, the pricing strategy, a French EV/HEV manufacturers should
adapt an alignment strategy in order to be competitive and remain accessible. With regard to
49

promotion, the marketing and communication plays a decisive role in the United States and the
expertise and knowledge of the American firm will help the French company to penetrate the
U.S. market.
When we look at the place of distribution, as well as the selling process, marketing research
should be combined with national expertise to allow a French electric/hybrid car manufacturer to
set the right distribution and selling strategy.
10.2 Recommendations

Among several electric car manufacturers in France, I choose Renault Zoe to internationalize its
products using a Joint Venture entry modes to opens its doors to the other international
perspectives, leading to brighter opportunities. Accordingly, based on the analysis of this paper
the following recommendations are forwarded:-
The joint venture will be formulated between two companies as a separate strategic
business unit that will be evaluated by its bottom line of profitability, economic value
added among others in addition to the contribution of the joint venture to the strategic
objectives of the two companies that form the JV.
Before entering in the details of the marketing plan, French electric manufacturer,
Renault Zoe require regular feedbacks and set up monitoring in order to keep a maximum
of control over its international marketing strategy. Indeed, the constant following of the
activity and the regular updates are mandatory for this type of internationalization.
A Joint Venture of Renault Zoe and an American auto manufacturer must implement
promotional campaign to further introduce its brand performance and advantages of
electric vehicle.
50

It is highly recommended to expand after sales service and repair infrastructure based on
the sales volume to different part of U.S.
The JV should enhance its strategic partnership that ensure to get the top rank in the EV
industry and achieve sustainable competitive advantage from its superior battery
technology and product design by introducing cost effective EVs for middle class
customers.
It is highly advised to capitalize on its innovative corporate culture and strong R&D
capabilities to reduce charging time for batteries and to increase the range that their EVs
can go in a single charge.
The JV should expand its production capacity in order to cater the future expected high
demand by increasing its financial base both through sell of equities and debt financing.
Renault Zoe should try to minimize possible supplier problems to accommodate the
future expected significant increase in demand through backward integration.
Through the application of conducive human resource management like the introduction
of well organized knowledge management it should try to attract knowledge workers
from different parts of the world.










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Annex-I The demand of global Electric Vehicle in 2011 and 2012

Source: (iea.org, 2013)












55

Annex-II Market Share of Hybrid and pure Electric Car volume in 2009 and projective 2020

Source: JD Power (Dolcera (website). Electric Vehicles Market., n.d.)























56


Annex-III The Market of Electric Cars in US

Source: Electric Drive Transportation Association (as cited in Dolcera (website). Electric
Vehicles Market., n.d.)





57

Annex-IV Electric vehicles penetrate different cities

Source: Electric Drive Transportation Association (as cited in Dolcera (website). Electric
Vehicles Market., n.d.)