International Merketing Country Case analysis

Germany
Table of Contents
1.0 Identification of case issues...............................................
...............................................................3
1.1 Background .................................................................
......................................................................3
1.2 Ethical Issues .............................................................
........................................................................3
1.2.1 Poverty...................................................................
........................................................................3
1.2.2 Corruption................................................................
......................................................................4
1.2.3 Child Labour .............................................................
......................................................................4
1.2.4 Poor working conditions...................................................
.............................................................5
1.2.5 Ethical consumerism in Germany ...........................................
.......................................................5
2.0 Formulation of alternative solutions .......................................
.........................................................7
2.1 Fund education andtraining program..........................................
....................................................7
2.2 Participate in Fair Trade Labelling Organisation International (FLO) to impr
ove transparency and
working conditions..............................................................
....................................................................7
2.3 Introduce new technology for soccers production...............................
...........................................8
3.0 Recommendation..............................................................
................................................................9
3.1 Recommendation for CSR practice in Pakistan.................................

................................................9
3.2 Recommendation for marketing to German customers............................
.....................................10
References .....................................................................
.......................................................................11
Appendix .......................................................................
........................................................................15

1.0 Identification of case issues

1.1 Background
According to Michiels (2010), more than 27 million people of the German populati
on
practise sports in a sports club where soccer has the highest number of players
with 26.5 per
cent of total members. To target the German soccer market and to maximise the Au
stralian
Sport Goods (ASG)s profit, ASG would need to reduce its soccers production cost by
outsourcing its manufacture to lower paid countries such as Pakistan. Since 1947
, Pakistan
has been an avid supplier of soccer to many developed countries. In mid-1990, re
latively 390
soccer manufacturers are situated in Sialkot and have now known as the worlds prin
cipal
manufacture centre for hand-stitched, soccer (Utting, 2013). However, to achieve
the
demands of international brands, the Pakistanis sporting goods industry encounter
human
resource and other labour issues. In addition of the latest series of destructiv
e events, these
issues have admonished the significance of Corporate Social Responsibility (CSR)
. Thus, this
case study will evaluate the principal ethical problems related to outsourcing t
he goods in
Pakistan. It will also propose three feasible solutions to rectify the situation
and nominate the
best solution to establish further analysis.
1.2 Ethical Issues
The issues of outsourcing the production of soccer stitching in Pakistan are pov
erty,
corruption, labour abuse and ethical consumerism in Germany.
1.2.1 Poverty
Poor governance is the central source of poverty in Pakistan. In consonance with
the Tariq et
al. (2014), the poverty rate in Pakistan is 21 per cent and approximately 54 per
cent of the
Pakistans populace is living below the poverty border. This suggests that 21 per c
ent of the
Pakistans society lives less than $1.25 daily and 54 per cent lives below $2 per d
ay (Ali,
2014). Due to poverty, not only did it increase vulnerability and reduces Pakist
ans business
confidence, but it has also impacted the human development in Pakistan due to in
efficiency

in provision of civil services. This economic situation could therefore affect o

ther areas of
Pakistan such as increase in corruption and child labour (Tariq et al., 2014). H
owever,
poverty in Pakistan reflects lower labour and production costs to foreign invest
ors (Andreff &
Balcet, 2013). Since, lower production costs provide cost advantages to foreign
firms over
local producers (Alfaro, 2014). Due to this, it has become the major motivation
for foreign
firms to outsource their production.
1.2.2 Corruption
Although, the regulation of Pakistan has already enforced the minimum salary, ma
ximum
operation hours and occupational health and safety in its labour law. However, t
he corruption
perceptions index of Pakistan scored 29 out of 100 suggesting that the corruptio
n level is high
(Transparency International, 2014). According to Nayar (2012), the enforcement i
s unfeasible
by the corruption between the employers and law inspectors where inspectors resp
ond to
bribery from managers to decrease the number of inspection to their factories. H
ence, this
lack of CSR practice leads to factors contributing to labour abuse such as child
labour and
poor working conditions. However, the beneficial element of corruption is that i
t enables
retailers to overcome troublesome regulations. The protocol in Pakistan is likel
y to be
obsolete when managing changes in the economy, hence the advantage of corruption
allows
the bureaucracy to be flexible and react to the current economic demands on the
system
instead of rigidly conforming to the regulations that may not solve the current
issue
(Sietsema, 2005).
1.2.3 Child Labour
Child labour is a severe crime all over the world. In relation to International
Labour
Organisation (ILO) (1996), children are mostly employed in manufacturing sectors
as child
labour are less expensive compared to adult workers. In Pakistan, approximately
8 million
children are involve in child labour where two third of them are hired full time
and of the full
time child labour, 37 per cent of the children are found to be stitching soccer
in which many
are aged between 5 to 12 years old (Global March International, 2015). Because o
f low
wages given to adult workers, child labour problems continue to dominate (Bhat e
t al., 2014).
To make matters worse, child labour can affect Pakistans human development. As it
reduces
opportunities for job creation, decreases the economic growth and would cause ma
ny people
to be trap in the vicious poverty cycle (Sharma & Herath, 2012). Conversely, the
re is an

argument if children are ban from working, they would be living in even greater
poverty and
hence reducing their chance of survival. Moreover, abolishing child labour may a
lso force
children into criminal activities in order to survive (World Vision Action, 2012
).
1.2.4 Poor working conditions
Secondly, poor working conditions can affect workers job performance both direct a
nd
indirectly. According to VeShancey (2015), the soccers factories are located under
ground
where it is restricted and the sole ventilation is obtained through holes in the
ceiling. This has
made many employees to suffer occupational health problems such as elbow inflamm
ation,
impaired fingerprints and severe back pains among soccer stitching workers (Ewej
e, 2014).
Moreover, most employees are also paid below minimum wage which it is insufficie
nt for
most workers to meet their basic needs. From the investigation of the Internatio
nal Labour
Rights Fund (ILRF) (2010), it is reported that 70 per cent of workers did not ac
hieve the legal
minimum monthly wage. This is due to the informalisation of workers as many fact
ories have
incorporated the use of casual labours where workers are not registered and are
unprotected
(International Labour Rights Fund, 2010). These employees are usually paid by pi
ece rate in
which they earn a daily income of USD$ 0.24 below the recommended daily wage of
USD$ 0.85 (Bhat et al., 2014). In addition, the desired working hours should be
limited to 48
hours per week and jobs with longer working hours will have higher risk for dise
ase and
injury (Dembe, 2009). Unfortunately, many employers prioritised profits rather t
han the wellbeing
of their workers, many employees are forced to work. Workers are required to wor
k 10
hours per day and 7 days per week in order to earn their livelihood (Ghani, 2014
). By
improving working conditions, this may reduce the firms revenue. Therefore, many
companies would rather remain the poor working conditions in order to take advan
tage of the
low manufacturing costs (Ghosh, 2014).
1.2.5 Ethical consumerism in Germany
Lastly, the importance of ethical manufactured soccer in Germany has been growin
g for the
past ten years where approximately 80 per cent of German firms that purchased so
ccer have
their individual code of conduct specifically the child labour aspect (Michiels,
2010). In
addition, it is found that 67.4 per cent of German consumers are buyers of fair
trade products
(Zimmermann, 2013). The three principal causes for purchasing ethical-produced p
roducts
are fair prices for suppliers, assurance of money is properly utilised and no ch
ild labour
(Zimmermann, 2013). Moreover, Germans consumer also engage in Internet shopping th

at
helps to prevent child labour through the use of internet software programme. Th
is is
supported by German-based Active Against Child Labour campaign where a software
named aVOID is created to automatically inspect and also publish variety of brands t
hat are
free from child labour in their supply groups (Weyden,2012). Conversely, there a
re also non
buyers of ethical products in Germany. According to Zimmermann (2013), 37.6 per
cent of
the non-buyers stated that fair trade products are expensive, 35.1 per cent of t
he non-buyers
did not have enough knowledge about fair trade goods and the remaining 26.1 per
cent were
sceptical that the revenue would fund the fair trade projects.
2.0 Formulation of alternative solutions
2.1 Fund education and training program
ASG could share responsibility with Pakistan to eliminate child labour and poor
labour
development in order to achieve positive outcomes that could benefit both suppli
ers and
workers. Education and training is the vital component for human capital develop
ment (Mtey
& Sulle, 2013). A possible solution that ASG may undertake to rectify child labo
ur and poor
labour development is to help Pakistan to fund education and training program. H
uman
capital development is an important asset for low-income countries. By educating
its people,
it would enhance the nations productively as education provides individuals the
necessary
skills for their jobs which can increase their capacity to perform more efficien
tly. As many
poor workers in Pakistan are illiterate and are lack of required skills, ASG may
execute CSR
activities by establishing schools in the low-income areas and provide adequate
training for
low-skilled adult workers. However, funding education and training program might
not be an
idealistic approach if the funded education and training services are not well-p
lanned. Poor
children and workers have several disadvantages in terms of social, physical and
emotion.
According to UNESCO (2001), if their disadvantaged position and daily experience
s are not
taken into consideration by school education and training system, these children
and workers
may not be able to fully benefit from the systems. The state of poor children an
d workers
such as poverty situation and conditions needs to be taken into account so that
appropriate
assistance can be targeted to them (UNESCO, 2001). Thus, to ensure that educatio
n and
training plan is positively responding to the needs of these poor individuals, i
t needs to
include the issue of poverty into special consideration when outlining of educat
ion and
training system.

2.2 Participate in Fair Trade Labelling Organisation International

(FLO) to improve transparency and working conditions
To build a sustainable reputation in the soccers market, ASG could utilise CSR pra
ctices to
achieve these desired goals. A company which are more socially responsible will
gain better
customer loyalty and profits (Chomvilailuk & Butcher, 2013). This can be accompl
ished by
participating in fair trade organisation. Fair trade is an economic and social a
ssociation that
ensure the transnational supply chain do not abuse social and human rights (Fair
Trade
Federation, 2015). It is crucial for ASG to learn from the previous case of fire
disaster in
Karachi, Pakistan where a fire broke out in a clothing factory causing the loss
of 255 workers
lives (Johnson, 2012). As such, ASG could partake in Fair Trade Labelling Organi
sation
International (FLO) where it allows ASG to create a transparent supply chain and
increase
negotiation power for workers. According to Baradaran and Barclay (2011), FLO ca
n assist
firms by providing full data of the products supply chain to consumers to enable t
hem to
make knowledgeable decisions and also educating workers to be aware of their rig
hts and
bargaining power. By participating FLO, ASG would be able to promote CSR practic
e in
their supply chain as many labours are given the opportunity to bargain for bett
er work
conditions and obtain better wages. In addition, ASG may educate consumers to ut
ilise their
purchasing power to purchase ethical goods through FLO. With that, this may help
ASG to
generate positive word-of-mouth from its consumers. However, FLO also has its li
miting
factor in which FLO does not always provide adequate protection to workers. In P
eru, certain
FLO coffee growers are not being paid at their minimum wage, although they are r
egistered
under FLO (Behne, 2012). This is because FLO insufficiently pays workers and pro
ducers as
extra revenue earned can be used to pay business expenses and other social activ
ities
(Griffiths, 2012).
2.3 Introduce new technology for soccers
production
Technological advancement is essential in maintaining economic growth. Compared
to China,
many of the soccers factories in Pakistan are small (Lund-Thomsen et al., 2011). T
herefore,
there is very little use of technology in Pakistans production process leading to
low
productivity level. In China each labour produce 40 balls daily whereas in Pakis
tan a fulltime labour only manage to produce four to five balls daily (Tanveer et al., 201
2). This shows
that it is difficult for Pakistans workers to compete against machine-stitched man

ufacturer in
international context. Hence, ASG could solve this issue by introducing advance
technology
to Pakistans soccer production to increase production level. Improvement in techno
logy
enables the firm to increase the quality of the soccer, reduce wastage and cost
of
manufacturing (Atkin et al., 2014). Unfortunately, introducing new technology ma
y not be
successful as it can cause technological unemployment. The impact of technology
causing
unemployment is greater in production sector (Janoski et al., 2014). Agriculture
industry in
certain Pakistan areas has experience unemployment due to the adaptation of mode
rn
technology (Cheema et al., 2014). Moreover, due to low wages received by workers
, they are
not keen to bring in transformation and efficiency into their job specifically i
f it is not
associated with pecuniary benefit (Tanveer et al., 2012).
3.0 Recommendation
The target market for ASGs product is the German customers. As mentioned, ethical
consumerism in Germany has been expanding. Since 1990, the disclosure of sweatsh
op by
multiple leading brands has empowered socially conscious consumers to understand
more
about the origins, corporate account and personality of the brands they buy (Moo
re-Evans,
2014). With that, it is understandable that country of origins (COO) plays a vit
al role in
determining consumers purchase behaviour.
3.1 Recommendation for CSR practice in Pakistan
Child labour and poor labour development exists due to lack of education facilit
ies and
training programs. ASG could create a powerful television documentary of the cur
rent child
labour and workers issues occurring in Pakistan. Consumers who watch a documenta
ry
concerning social issues have higher chance of being prompted to purchase ethica
l goods and
services (Young, 2011). As such, this may inspire and educate German customers t
o
participate in taking steps to fight against the social issues in Pakistan throu
gh purchasing
ethical produced soccer. ASG could then implement charity marketing to raise fun
ds to
established good education facilities and training programs. Every soccer being
purchased by
the German consumers will be donating $5 to eradicate child labour and poor work
ers
development. The collected donations will be used to fund training programs, bui
ld schools
as well as funding school materials to children in Pakistan. To make sure more G
erman target
audience are being exposed to the television documentary, ASG may air them to th
e top

television channels in Germany such as ZDF, ARD and RTL during Germans television
prime time 8 pm to 11 pm (Commission on Concentration in the Media (KEK), 2014).
The
total views in 2014 for ZDF, ARD and RTL are 13.3 per cent, 12.5 per cent and 10
.3 per cent
(Appendix B) (Commission on Concentration in the Media (KEK), 2014). As such, AS
G are
able to develop goodwill between ASG, the German customers and the Germans
community.

3.2 Recommendation for marketing to German customers

To disclose ASGs CSR accomplishment, ASG could display its fair trade practices by
incorporating Fair Trade Label into its product and packaging that address the p
roducts
information (Appendix A). This is because Fair Trade logo has the capacity to pr
ovide
customers with information regarding the nature of the production procedure (Dra
gusanu et
al., 2014). To inform consumers about ASGs fair trade soccer, ASG could market the
m
through popular social media in Germany. According to Nielsen (2012), 46 per cen
t of
socially conscious consumers are more likely to trust and influence by social me
dia to
purchase ethical goods. ASG could post their online advertising in the top socia
l media
platforms in Germany such as Facebook, KWICK! and Instagram (EMarketer, 2015). T
he
percentage of Facebook, KWICK! and Instagram users for several times daily are 5
0.7 per
cent, 41.7 per cent and 34.7 per cent respectively (Appendix C) (EMarketer, 2015
).
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AMB 336 International Marketing
Appendix
Appendix A (Fair trade logo on products)
(Nock, 2015) (Coulter, 2014)
Appendix B (Total viewings of Germans television channels)
(Commission on Concentration in the Media (KEK), 2014)
15

Sin Yee Lim N9002588

AMB 336 International Marketing
Appendix C (Percentage of Germanys social media user)
(Statista, 2015)
16

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AMB 336 International Marketing
AMB336 International Marketing Assignment One Criteria Sheet C
Case Study
Name & Student no. __Sin Yee Lim (n9002588)______________ Tutorial no. _1-3 (Tue
s) & 2-2 (Thurs)______ Word count ____1800________
Grade 7 6 5 4 Fail
Mark 15-12.75 12.74-11.25 11.24-9.75 9.74-7.5 7.49-0
Analysis
Understanding A clear understanding of the An understanding of the case An under
standing of the case An understanding of the case A failure to mention key issue
s
ethical practice and case study. Identification of key study. Identification of
key issues study. Identification of main study. Identification of some related t
o international marketing
underpinning issues in the case study & in the case study & related to issues in
the case study & issues in the case study & and ethics. A failure to understand
ethical theory in related to country context. Key country context. Key issues ar
e related to country context. Main related to country context. the issues pertin
ent to the
relation to this issues are based on based on international marketing issues are
based on international Some issues are based on background of the case study, n
ot
context international marketing and and ethics concepts. Supported marketing and
ethics concepts. international marketing and related to country context. Scant
use
/15
ethics concepts. Supported by
high-level literature research.
by literature. Supported by literature. ethics concepts. Some support
by literature.
of literature in the process of
understanding the case study. Word
limit exceeded.
Demonstrates full Analysis is logical. A sequenced Analysis is logical whereby a
Analysis is logical whereby key Analysis is logical whereby Fails to analyse lo
gically. Key issues
knowledge of identification of key issues are sequenced identification of key is
sues are justified & related to key issues are highlighted & are not justified &
not related to
relevant social/ justified by solid argument & issues are justified by solid cou
ntry context. Analysis takes related to country context. country context. Argume
nt is not
cultural related to country context. argument & related to country into account
not just a singular Argument is supported by support by literature. Word limit
considerations Analysis related to international context. Analysis takes into ac
count viewpoint. Argument is well some international exceeded.
/15
ethics takes into account not
just a singular viewpoint of an
argument. Argument is well
support by a quality
international marketing related
ethics theoretical platform
not just a singular viewpoint.
Argument is well support by
international marketing related

ethics literature
support by international
marketing related ethics
literature
marketing related ethics
literature
Evaluation
Mark 20-17 16.9-15 14.9-13 12.9-10 9.9-0

Sin Yee Lim N9002588

AMB 336 International Marketing
Ability to
recommend and
justify course(s) of
international
marketing action in
the given case(s)
Well thought out evaluation of
alternative solutions with final
solution is based on solid
marketing argument and an
international marketing related
ethics theoretical platform &
linked to country context.
Research from quality literature
supports the solutions.
Evaluation of alternative solutions
and a final choice solution is
given based on solid marketing
argument and an international
marketing related ethics
theoretical platform & linked to
country context. Research from
quality literature supports the
solutions presented.
Evaluation of alternative
solutions and a final choice
solution is given based on a
theoretical platform & linked to
country context. Research from
international marketing related
ethics literature supports the
solutions presented.
Evaluation of alternative
solutions and a final choice
solution is given & linked to
country context. Research
from international marketing
related ethics literature
supports the solutions
presented.
Evaluation of alternative solutions and
a final choice solution is not given.
Not related to country context. Little
to no support from the literature is
given. Word limit exceeded.
Student capabilities: Have a Social and Ethical Understanding (SEU): 5.1 Apply e
thical reasoning, standards or codes of practice relevant
to the discipline and make decisions that are informed by social and cultural un
derstanding
7= 50 to 42.5 6= 42.4 to 37.5 5= 37.4 to 32.5 4= 32.4 to 25 Fail= 24.9 to 0
/20
/50
Grade: