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University of Wales

MBA International Management

Critically evaluation of the international pricing issue for multinational corporations based on the factors that have impacts on pricing decision making in the context of the differentiated or similar characteristics of countries. A case study of Bridgestone Corporations subsidiaries of UK and Turkey

by Tolga KOYMEN
UoW ID: 1092227299339 19/12/2011

Supervisor: Kevin OHARA

This research would not be completed without acknowledging, support and guidance of below persons. I would like to thank to my supervisor Mr. Kevin OHARA for all guidance, help and supports provided by him during my study. I would also like to thank to Mr. Brett EMERSON, Mr. Sevket SARAL, Mr. Tolga OZBAYAZITOGLU, Mr. Mustafa ORAK and to all Bridgestone family. I would specially like to thank to my wife, Mrs. Ilkay KURT KOYMEN for her supporting during my whole MBA study and being part of my life.

This research critically evaluates the international pricing issue of multinational corporations, which operates across countries, based on the factors that have impacts on global pricing decision making in the context of differentiated or similar characteristics of countries. In order to achieving ultimate objective, the case of Bridgestone Corporations two subsidiaries, which are Bridgestone UK and Bridgestone Turkey, was used. This research has been based on different theories behind international pricing which is industrial economics theory, contingency theory, and corporations resources theory. In the context of industrial economics theory, it is found that Bridgestone is using benchmark pricing strategy. Meanwhile, Bridgestone has been taking into consideration of price fairness because of its distribution channel structure, competition laws, and entry barriers. On the other hand, costs, especially raw material costs, in which whole tyre manufacturers have lack of control, hugely impact pricing. Additionally, the labour costs and transportation costs have caused becoming a competitive disadvantage for Bridgestone over its competitors, especially low cost Asian tyre manufacturers when pricing. In the context of contingency theory, Bridgestone has a tendency of adapting its pricing policy through leaving it to local managements in each country in the case of different factors of locals. The company has provided the opportunities of higher availability of quick and deeper market analysis and response, deeper penetration of local markets, better understanding of significant differences of local markets, easier to get new ideas, opportunities and innovations, and using the motivation of local management. Meanwhile, the strong communication between headquarters and its local subsidiaries has provided the correct implementation of the pricing policy. In the contexts of corporations resources theory, Bridgestone has a tendency of making investments on branding, and brand awareness that provide the most competitive advantages which cannot be imitated by its competitors. On the other hand, original equipment impact which provides reinforcing on the choice of end users tyre replacement decision with the same brand already fitted on the passenger car is being taken into consideration. On the other hand, again in the light of competitive advantages of corporation, it is clearly observed that Bridgestone has made investments on environmental friendliness, being safer for consumers family life, social responsibility campaigns, and after sales conveniences for customers in order to create positive differentiations, to provide emotional connections with consumers, to win the emotional branding race, and to sustain its leadership due to setting higher prices for its products over its competitors.

Keywords: International pricing issue, factors that affect international pricing, international pricing in multinational corporations.