Deronde International

Q1. Deronde International is a French company selling perfume internationally. To what degree do you think they can produce a “global” product? Why?

Marketing a brand in international arena always involves certain risks related to consumer behavior, policies and culture of a country (Madura and Fox 2007). Deronde has established itself as a successful perfume brand over past few decades and its performance and demand in certain countries has captured a considerable number of consumers who are brand loyal.

Entering different markets like Asia where consumer preferences are different from the Western countries will involve new strategies for Deronde. Apart from the cultural aspects, the establishment of Deronde in countries like Germany and China are difficult from perspective of government policies as well. For instance, in Russia few decades ago, the women were forced to use national cosmetic products and perfumes designed and manufactured by local companies.

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The use of international brands was a forbidden luxury that Russian women could not afford. However, with aggressive globalization all over the world, the trends of using international brands penetrated into Russia and other countries (Kenneth 2003). Entering a culturally different state will be challenging for Deronde initially since the acceptance of its products will heavily depend on the marketers and managers representing Deronde.

For country like China, which is the biggest target for Deronde, hiring Yang as the SVP for product development is a wise step by Alain since he has vast experience and knowledge about Chinese culture and the negotiating parties can comfortably and positively deal with Yang on basis of shared culture. When firms enter another country, it is essential for them to follow the social will and obligations of that nation in order to indicate respect for the culture (Lee 2008). Deronde definitely has a strong management team to deal with resistance in Asian countries.

Deronde can effectively create global products from its current line by altering its products according to consumer preferences. For instance, in China consumers are more inclined towards light and flowery fragrances thereby, giving a room for products that can be accepted by Chinese consumers. Mooij (2009) defined several approaches and difficulties that foreign investors face in culturally different countries and suggested that firms should between using a globalised approach towards new markets or adopt contingency approach.

The global approach for Deronde will be to introduce similar products worldwide without altering the scents. However, in order to avoid any failure in culturally bounded nations like China, Deronde should adopt the contingency approach of designing perfumes that would suit the culture of the countries it intends to enter. Deronde will need to focus on the cultural aspects of countries as well in order to show respect for their preferences and cultural values. A simple example can be the reaction of Yang’s daughter towards the idea of air fresheners that Yves suggested.

The idea of a French perfume trying to market itself as the Chinese culture friendly product was deemed insulting to Yang’s daughter. The acceptance and appreciation of perfumes from France has already been at its highest level since past decade with the perfume sales expected to rise to $336 billion in coming few years (Jose 2008). Deronde can capitalize on this widely accepted appreciation of the product line and its entrance in different countries has bright chances of success given that the firm adapts its strategies and set up to the culture of each specific country.

Q2. Do you believe it was a good idea to promote Yang to this new position? Why?

The promotion for senior Vice President of Global Product Development was a strategic move as a result of illness of previous SVP, Pelletier. Deronde International was on the verge of stagnant growth and in case of intense competition, further deterioration. Therefore, there was a need to enter those untapped markets where there is huge potential to create market for Deronde’s product line.

The screening process for SVP position was done by the CEO, Alain himself along with other executives and senior management. The four potential candidates for the position were all competent in their respective areas; however, the firm’s strategic focus was strictly on expanding into the emerging economies. Any investment in foreign country involves great risks associated with unfamiliar country risk factors like political situation, economic conditions, Foreign Direct Investment (FDI) policies and most importantly national culture (Becker 2000).

The emerging economies like China, India, Brazil and Russia though, have captured a lot of foreign investors’ attention; pose a great cultural difference threat. Prasad and Ghauri (2004) carried out a research on Swedish culture and observed that Swedish people are most likely to prefer investment in firms that are more related to Swedish culture. Similarly, Budhwar and Debrah (2004) observed during their research on China, that for a nationalist state like China, it is extremely important for a foreign firm to adopt culture of the country in order to successfully set up business in China.

Given the importance of cultural, political and economic aspects, it was essential for Alain to select a SVP who could extend the firm’s operations to emerging economies especially China that provided great future potential for the firm. The three candidates other than Yang; Lambert, Saurac and Bernier, were all competent and team players, however, they had less experience in foreign markets especially Asia. Deronde’s financial condition urged for profitable and growing results from the expansion plan and therefore, high profits, result-driven attitude and strong commitment were the priority of Deronde’s management.

Yang, given his skills, past performance and potential comfort zone with countries like China, seemed to be a good choice. On the other hand, Alain overlooked one of the main aspects for a SVP position that included team work and creativity, both qualities that Yang lacked. Also Yang lacked the understanding of his company’s main set up and operations since from beginning he was focused on expansion and collaborations in China.

Forsgren (2008) in his internationalization theory stresses the need of exploiting ‘firm-specific advantage’ and refers to strategy of entering another nation as an ‘inside-out phenomenon’. The management of a foreign firm needs to first evaluate its own strengths and weaknesses and study its structure to implement and blend it with other nation’s culture. Yang seriously lacks on his affiliation with Western side of the company as he constantly ignored suggestions and discussions related to company’s operations in Western countries and kept on dictating suggestions for Chinese market.

Despite all the conflicts with Yang and his behavior, the choice of Yang as a Senior Vice President of product development can still remain a right decision given that the management, especially Alain, cooperates with Yang and communicates the need for team work and long-term goal commitment for firm apart from expanding into Asian markets.

Q3. What would you advise Yang to do in this situation? Can he succeed?

In a culturally diversified workplace, there are several issues that can arise due to difference in work approaches by employees belonging to different cultures.

It is a normal issue that results in a misunderstanding of role expectations and actual sent and received roles (Stockdale and Crosby 2004). The expected role of Yang as perceived by Alain was to help the firm diversify in different markets on basis of his experience with China as well as being a team member who is open to any suggestions and creative ideas related to emerging economies as well the established business in Western countries.

However, Yang perceived his role as a SVP who is now senior to other employees and has complete knowledge of Asian markets and thus, can implement strategies of his won choice. The initial mistakes by Yang have created an atmosphere of discomfort for the rest of employees at Deronde and especially for Alain, the CEO of company. Alain and the colleagues of Yang are being less supportive in communicating the issues with Yang who is confused and frustrated with a different work environment than he previously had in China.

There are certain elements of workplace that Yang needs to understand in his current situation. Firstly, being shifted to head office as a global SVP for product development, Yang’s job responsibility assumes to include global perspective of working conditions, markets, people, in short a different culture. Yang should focus on his responsibility as a representative of Deronde and thus, develop an understanding of company’s operations worldwide and most particularly at home i. e. Paris.

Secondly, Yang must understand the importance of upper management as well as his colleagues and subordinates. The open attitude and friendly atmosphere between Alain and rest of employees like Antoine and Yves speaks for itself about the open culture and candid environment at Deronde. Yang must adopt the culture of company instead of imposing his own since he himself will be managing the issue of diversity while expanding into and dealing with several representatives from various cultures.

This understanding is also important for the favorable attitude and dedication of rest of the team including Yves, Elise, Antoine and other colleagues on internationalization team. Yang must communicate with the upper management, in particularly with Alain, about his discomfort with the work environment. Initiation of such conversation will lead to resolution of certain unclear issues on behalf of both parties.

Yang’s commitment to his work is his major quality that drew Alain’s attention; however, Yang is creating an impression of being more of a loyal Chinese rather than Deronde’s loyal employee. Such lack of consideration for company overall poses a threat of potential failure in entering other markets as well as no gain from hiring Yang for Western side of business. Yang must take interest in each product including the concepts of body sprays that he rudely ignored in front of Yves on the basis of its rejection in China.

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