Scancrm Company - online Customer Relationship Management Software Systems

Table of Contents

Executive Summary        

1.Introduction        

2.Culture        

2.1 Mistakes by ScanCRM        

3. Field Observation        

4. Microtargeting        

5. Fundamentals of Chinese Business Culture        

5.1 Guanxi (Relationship)        

5.2 Face        

5.3 Foreignness        

5.4 Hierarchy        

5.5 Respectful Attitude        

6. Cultural and Business Factors        

6.1 Motivational Factors        

6.2 Status Concerns        

6.3 Perceptual Issues        

7. Differences Between Northern and Southern China        

8. Conclusion        

9. References        

Executive Summary

ScanCRM is a privately owned small, high-technology firm offering online Customer Relationship Management software systems across multiple platforms. ScanCRM directed its attention towards the China’s market due to the need for market expansion. This report discusses about the factors behind their failure.

Two strategies stated in the report that ScanCRM could adopt are Field Observation and Microtargeting. These strategies allow an an organisation to better understand the local culture and target on a specific segment of a market.

In order for ScanCRM to be successful in China, organisations must know these fundamentals, “Guanxi”, “Face”, “Foreignness”, and “Hierarchy”. Organisation should adopt a respectful attitude in general.

Issues such as cultural differences and business factors has an impact on doing businesses in China. Motivational factors, status concerns and perceptual issues are a few of the causes.

China is divided into two main regions, namely Northern and Southern China. They have different behavior and cherateristics which is strongly influenced by their respective cultural background. Organisation have to understand the differences before venturing into the market.

In this report, it will examine why ScanCRM failed to enter the market in China, the alternative strategies, fundamentals of Chinese Business as well as further studies on the differences between the two countries before take the plunge into China’s market.

1.Introduction

Based in Wellington, New Zealand, ScanCRM is a privately owned small, high-technology firm offering online Customer Relationship Management software systems across multiple platforms. ScanCRM directed its attention towards the China’s market due to the need for market expansion. This report discusses about the factors behind their failure.

2.Culture

Culture is the total sum of learned beliefs, values, and customs that serve to regulate the consumer behaviour of members of a society (Schiffman et al. 2014).

2.1 Mistakes by ScanCRM

The buying behaviour of the consumers are influenced by factors such as culture, social and psychological. However, in the case of ScanCRM, the organization failed to identify the buying behaviour in China as the management use a simplistic analysis approach, thus they misunderstood the vital point of the local culture.

 A cross-cultural consumer analysis is defined as the effort to determine to what extent the consumers of two or more nations are similar (Schiffman, 2014). This analysis provides ScanCRM with a better understanding of the psychological, social and cultural characteristics of  foreign consumers that they want to target, so as to better design effective marketing strategies for that specific market target. ScanCRM was more concerned about  the projected financial returns hence neglecting the unique characteristics of small and medium enterprises in China.

3. Field Observation

ScanCRM could procure a local Chinese consultant to conduct field observation by setting up a base in China, it allows the company to be involved and to interact with the environment while identifying the local behavior. On the other hand, field observation is very costly and time consuming as it requires a base to be established and to hire high levelled experts and researchers in the relevant fields.

4. Microtargeting

It is especially crucial when marketers are entering new markets to better understand the cultural differences. ScanCRM entered one of the biggest business sector in the world; China. They could utilise both microtageting and niche marketing, there are however some challenges that should be well managed. An example would be test marketing and consumer analysis. Indicated by Clemons (2010), for an organisation to be successful in microtargeting, they should pay a listening ear to their customers. Listening also implies that they have to practice intensive surveys, content reviews and to welcome all positive and negative feedbacks from their customers. With the modern technology aid, it is easier to tailor and offer to a specific targeted market segment. Furthermore, microtargeting proves to be extremely effective to rival against existing organisations in China.

5. Fundamentals of Chinese Business Culture

The four fundamentals of Chinese Business Culture are “Guanxi”, “Face”, “Foreignness” and “Hierarchy”. Organizations must know these fundamentals in order for their business to be successful in China.

5.1 Guanxi (Relationship)

“Guanxi” is a chinese term used to describe relationship that may results in the exchange of favors “beneficial” for the parties involved which can be for both personal and business purposes. Good “Guanxi” can be the key in doing businesses in China and must be properly maintained to ensure proper positioning for future businesses (World Learner Chinese 2015). Inviting or hosting dinner for prospective business partners as well as exchanging favors such as “inside information” are some of the ways to establish good relationship in China.

5.2 Face

In China and many parts of Asia, “Face’ represents a person’s reputation within multiple spheres and it plays a vital part as the Chinese emphasizes a lot on rank and hierarchy. The three main components that forms the concept of “Face’ that determine the success of business in China are “Saving Face”, “Losing Face” and “Giving Face” (Upton-McLaughlin 2013).

5.3 Foreignness

Foreignness means that an organization is unknown or have too little knowledge about a country’s business culture. For organizations to be successful, they must understand the business system that works in China and overcome this “Liability of Foreignness” (INSEAD Knowledge 2013).