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Magna Company

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Introduction

International marketing and expanding markets can enhance the growth of a business.

This project thus examines the probability of Magna International company, growing on its

international exports to increase the company’s overall sales. Magna is among the main

companies leading in automotive supplies globally. The segments of this company are mainly

based in Europe, North America, Asia, and Africa. The main products and services offered by

this company include exterior, chassis, powertrain, vision, modules, roof systems besides there

are offering manufacturing contracts and vehicle engineering. Magna is an international vehicle

manufacturing company located in Canada with its headquarters in Aurora, Canada. The

company has 309 operations in manufacturing and about 99 developments in terms of products.

Their sale outlets are present in almost 30 countries. This project aims at analyzing the likeliness

of Magna International Inc being able to expand its market internationally by targeting new

markets in China. Currently, the international market of this company is based in North America,

Asia, and other parts of the world (Magna, 2021).

Mission and Vision of Magna

Magna mission aims at delivering superior investment outcomes together with mitigated

risk in underserved market segments while the vision statement of the company states that “we

exist to matter. for our own, our partners and society”

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Magna Values and Ethics

The company’s value includes autonomy, transparency, understanding, preservation,

innovation, and impact. On the other hand, the ethics of the company includes the guidelines that

ensure there is honesty and integrity in all the business dealings undertaken. The main factors

that administer the code of conduct and ethics include driving integrity in business dealings,

delivering integrity through transparent reports, working with integrity within the workplace,

delivering integrity using good communication, and portraying integrity through the actions of

the company. The code of ethics that has been adopted by the registrant of the company applies

to all the employees, including the chief financial officer and executive officer, its controller, and

all other persons acting in the same positions (Magna, 2021).

Company Goals

There are various objectives that the company looks to accomplish. This includes having

the most advanced auto industry evolution. This entails objectives such as having the most

advanced tech and complex industry, advance regulation of products in terms of safety, focus

majorly on industrialized nations in terms of jobs, capital, technology, and taxes. The future

trends that the company has focused on include artificial intelligence, augmented reality, the

internet of things, driverless cars, advanced robotics, additive manufacturing, and drones

(Magna, 2021).

Description of the Chosen Market (China)

China is amongst the countries with the highest number of people worldwide according

to statics given within the last five years (Nocke&Yeaple,2014). Apart from this, china

economically has been facing tremendous growth since the turn of the century, and also

currently, China is ranked among one of the best when it comes to business. Due to the size of
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the country, there is a huge market gap when it comes to the movement of products from one city

to another (Belkhodja,2016). With the expanding e-commerce, there is a huge need for products

to be transported from one city to another. Being an entrepreneur, there are benefits of growing

trade expansions through opening a moving company in some of the major cities in China.

Services of the movement of the products can be availed within the cities through the sweeping

wave of e-commerce. Therefore, to make this strategy a success the idea is to fill the gap

between customers and the local e-commerce companies by facilitating the delivery of products

after purchases.

Target market.

China has the largest scope of the market when it comes to a share of the E-commerce

Sales worldwide, leading past America, that has been promoted by the high population and also

the high literacy levels within the populations. Currently, 6 main companies are operating within

china regardless of the big size, there has not been able to serve the entire needs of the

population (Belkhodja,2016). The demand in the new stores is different from the local outlets.

This is because within the new market sales volumes are expected to increase to over

500,000,000 implying that there will be a shortage in companies that give delivery services of

the products. Therefore, this implies that if the company makes investments in the country,

earning of profits will be noticed within the end of the second year in operation. In the business

venture, the target is starting up Ecommerce companies and some of the already recognized

business models.

Magna’s Strengths and Competencies

There are various advantages that the company has whereby the same factors make the

company advantaged as the tier supplier including, manufacturing excellency, high depth in of
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talent, able to generate cash to enhance investments in places related with “car of the future” and

also having to enable access to new customers and business models.

Product Development

In the auto parts industry and accessories manufacturing, diversity is very high and the

competition is also high having low shares in the market connection. The main 57 players within

the industry only account for 43.3% of the entire market share, indicating that the industry

market is disbursed within numerous small operators in different countries. For instance, in

North America, the industry entails more than 5,000 firms having almost 6,000 operations

factories, making an annual revenue of almost $200 billion. In this vein, the diversification is

gradually reducing and the huge industry occupiers are buying smaller producers to gain a more

competitive advantage and also a cost reduction as much as possible. The main competitors of

Magna include BorgWarner Inc, Robert Bosch Corp, Lear Corp, Johnson Controls, and Hyundai

Mobis. Magna puts its main focus on giving innovative designs and procedures and also in areas

that have low costs in labor (GNAM, 2016).

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Current perception of the industry and consumers.

The company operates relying on its mission statement and core vision. Within its vision,

there is a combination of various important elements, such as respect for the people which

includes both the customers and employees, focus on the needs of the customers, focus on

constant improvements, and a zero-defect strategy into a long-term value which is the mission

statement. These are the desired image of the company’s future intentions which makes up the

mission of the company. That stated, the mission of Magna is constant enhancements in

economic outcomes and performance, manifesting high-tech electronic systems and gadgets that

will contribute to solving the issue of excess consumption of fuel and enhancement of safety.

Economic, Political and Legal Analysis of China

The average yearly growth rate has been less than 1 percent over the last 10 years. This

result has pushed for the urge on Beijing to add more children to mitigate the population decline.

Census was done in 2020 where 7,000,000 data collectors went door to door to gather

information about families. It was noticed that the birthrate in china overall had reduced in recent

years. the low fertility rate is an outcome of china’s economic and social development. As the

country continues to be enhanced due to more developments, the birth rates have reduced as

education and careers are given more priority (BBC, 2021).

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The overall accumulated revenue was 21,586.95 yuan while the medium was 18,371.34

yuan, implying that in china the revenue is not as severe as in the rest of the ecosphere. However,

the average proceeds were significantly higher than the median significantly. On the other hand,

the price house index was to assess the cost of living. the average city price within certain

provinces was used to represent CPI provincially and used the numbers to measure the real cost

of living. The cost of living was found to vary hugely across china as portrayed in the graph

below.
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In the year 2020, china had a population of 1.41 billion. Regardless of the population

being on a steady growth, the fertility tolls were low and the age set of those employed is

gradually reducing since the year 2014. The employment force in China that refers to the

population that is over 15 years and capable of being employed was almost 800 million in the

year 2019. The employment force in the country of those working has slightly reduced between

2007 and 2019. Of those employed in 2019, almost 434 were employed in urban areas, whereas

342 million were employed in the countryside areas. Between 2010 and 2020, the share of those

working in the primary sector reduced more in 2020 as those hired in the tertiary sector enlarged.

Those employed in the secondary have since then been reducing as china tries to shift towards a

service-driven economy (C. Textor, 2021).

Trade Analysis

China is highly regulated when it comes to trade. After a plant has been established, each

automobile model undergoes a special access permit for the production of automobiles and other

related products that are controlled and given by the department of manufacturing and

information technology in china. Therefore, for a firm to be able to get a permit certain

requirement to have to be met. This includes obtaining capital, personal requirements, and venue

of operation. For the production of parts, a production license has to be issued by the

administration of china related to quality supervision, inspection, and Quarantine. Secondly, the

automotive products have to be factory-made in accord with compulsory standards known as

Guobiao maintained by the china administration (Zhou et al., 2019).

Marketing Entry Strategy

Although Magna international first arrived in china by buying a seating company in the

year 1996 and an affiliate supplier in 2002, both were operated by the Chinese. However, this
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time around the company is going to join the market through a direct entry to administer most of

the operations on its own. This will be an advantage to the company as they will be able to tackle

the competitor on a one-on-one basis unlike back then when the Chinese government ensured

ownership of numerous companies (Matthew, 2014).

Distribution Channel

The distribution channel in china will be a wholesaler and own sales force. This is

because of the fact the company is huge and has a well know brand. For this reason, there is no

need for much marketing as the brand already speaks for itself. Therefore, by using its sales and

wholesaler’s strategy in distribution, the business is more likely to grow quickly and begin

generating revenue. This will be efficient and vital in serving the main cities in china locally

given the high vehicle ownership currently in the country.

Magna’s competitors

Magna is a huge company in the sector of the automobile in terms of dominance both

locally and internationally. The company is well known and when compared to its competitors in

china they are almost at the same pace given they are all big companies that have been in the

game for a long time. In terms of competition and those that own the biggest share of the market,

china companies understand the stiff competition they get from Ontario, Canada in terms of the

automobile industry. As the president of the Automotive parts manufacturers’ association in

china Volpe states, “it is obvious the Chinese understand the Ontario is viable; else never would

I have gone past the first conversation”. This followed a trade tension and global politics

intended to lure china-based manufacture to be located in Canada (Hall, 2019).

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The company has got its place within the international business by providing some of the

core parts in the field of manufacture of vehicles. Currently, the company can produce some

high-end parts in the manufacturers in Northern America and the United States nations. (Fern

Fort University,2019). By being able to deliver services efficiently, the company has been able to

strong within the competitive market. Through the same, the company has been able to gain

track within the international sector by making partnerships with manufacturers and local

dealers.

Analyzing the Chosen Market

China’s climate consists mainly of tropical and subarctic variations. On the other hand,

the topography of the country includes some of the highest peaks worldwide, river valleys, and

enormous plains that are prone to soil-enhancing flooding. Additionally, agriculture dominates in

the vast areas which are favored by the subtropical climate. The main target market of the

company includes involves the local market of China. This is because of the huge population in

China which results in more of the Chinese people having vehicles. Thus, by focusing on the

local market many opportunities are available. Additionally, the main target market for the

Chinese manufacturers in china target exportation and the international market.

According to Geert Hofstede cultural factors indicate that in China that there is a

significantly high-power distance. There is a low ranking when it comes to individualism that

portrays a committed group orientation. The culture of collectivist is paramount in the country.

The country pushes for a bold relationship where everyone is obliged with the responsibility of

their fellow people. The level of individualism is ranked low in china that could be contributed

by the imposed policy of communist rule in comparison to the values of individualism.

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Geert Hofstede Cultural factors indication.

Certain cultural factors are used to compare the cultural differences among many nations.

Power distance vs collectivism, hesitation avoidance, power distance, maleness vs feminity, and

long-term alignment is used. In China, there is a high-power distance rank compared to any other

continent. This portrays a high difference between the wealthy and poor in society. The culture

in this state also ranks high in long-term orientation. There is a low rank in individualism that

affects the group orientation of the extended families, family, and even extended relationships.

Loyalty on the other hand is a collectivist culture that has to be obeyed.

Market Analysis

These are the defined goals of a company aiming to attain. In the case of Manga

International, the aim is to meet certain goals including providing a clear direction for the team

members to adhere to, make intentions clear for the marketing team and give information to the

executives for them to review and support, thus the marketing objectives of Magna company are

a pivotal part for a successful market strategy in marketing. More sales are expected to be made

as it is the only way that will ensure there is a good flow of cash for the company. Additionally,
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this will enable the company to make more revenue due to the increased number of sales within

the new market. As the new branch begins the sales are expected to be low due to the

competitiveness in the industry, however, in the long run, the number of sales is expected to

increase.

To penetrate the market, the company aims at meeting the needs of the customer and

quality as a priority. Most of the sales will be targeting the local industries and personal needs of

the huge population of China. Therefore, the gaps that are within the country locally can be filled

by Magna international Inc. additionally, the company will ensure that the prices are fair and the

range same or lower compared to that of competitors. The most appropriate platform that can get

to the targeted market is online ads that can be accessed through social media and YouTube. This

is also the fastest mode to reach the consumers given that almost everybody has access to the

internet and portable devices. Additionally, the advantage of this mode of communication is that

is somehow cheap as compared to other platforms that are used for advertising.

Conclusion and Recommendations

Swot Analysis

Strengths

The company is a global giant with the capability of manufacturing a variety of products

with the option of producing spare parts of a whole vehicle, Global operation being present in

roughly 30 countries, Competitive advantage due to a wide-scale in distribution besides

production, Strong brand name is given the company is among the biggest automobile

manufacturers, Strong financial performance, making it possible to have ample free cash flow

and a rigid balance sheet.

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Weakness

Customer concentration is not well focused on given sales are concentrated towards less

large key clients, It is a capital intense sector, leading to huge fixed costs during the expansion

into new networks, The company heavily relies on the North American market occupying almost

56% of the total sales, A big array of products across numerous countries leading to management

expenses being complex and problematic.

Opportunities

Open gaps to enhance and develop the network for its automobile goods, increase

demand in fast-growing countries as global per Capita returns grow, The Asian market still has

opportunities for expansion despite the already success demonstrated by Magna International Inc

in this country.

Threats

Foreign exchange fluctuation mainly in china that has to be reduced using the most ideal

hedging plans to mitigate currency appreciation and depreciation risks, Increased competition

within the market share poses a threat, The industry profit margins are correlated with the cost of

product manufacturing such as steel and crude oil causing the industry to be vulnerable to

variation of input costs.

Recommendations

To pursue the aim of energy conservation and environmental quality, Manga should

ensure it liaises with its government in employing vehicle performance standards regarding fuel

economy, safety, and durability, emissions. With such a strategy, the more is likely to prohibit

the field to manufacturers with the same level of technology to cater for performance standards

and production of the required standards products. The outcome is most probable to lead to the
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association within the industry as a forecasted plan for the enhancement of the automotive

industry.

Conclusion

In summary, China is perceived as a promising nation to undertake business operations

due to its huge size concerning population and the numerous businesses that are happening in the

nation. With the purchasing power of the growing nation, the future of Ecommerce in this

country is promising hence it is of importance if Magna International Inc can expand its services

to this country. By using the untapped customer base uniquely offering essential services can

assure the company of generating extra revenue after expanding its services to this country.

Additionally, by doing global operations as a company, Manga International Inc will be

cementing its position as the leading haulage company in Canada.

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