Collaborating for New Product Development - Case Study Example

Export Plan Name Institution Export Plan Understanding the business culture has been tipped as a significant milestone in successful business venture in Indonesia. Pundits have put it that establishing a relationship with a person or an agency is an investment worth taking in this part of the world. The aspect of negotiated contracts is still significant in doing business. People in this country are not prone to breach of contracts that are drawn with distinguished peers even if such could have few or no legal implication (Dean 2008). It is worth noting that recent reforms by the government have greatly changed the approach to business and the playing ground is much smoother than it was few years ago. This report recounts some of the attributes of the business environment in this country The most vital complement in Indonesia’s business context is the amendment of legislation that allowed fully owned companies from foreign countries to operate in most of the sectors (Dean 2010). Foreign investors can now operate without the prior requirement of forming joint ventures or partnership. New entrants in the business get the assistance of notaries who make the process a bit easier. These experts enable the investor to navigate the legal and regulatory system and other bureaucracies at reasonable fees. Besides this assistance, the notaries hold a high social status and are significant enough in establishing networks with consumer groups. Singapore has made significant steps towards adopting policies of free trade and market liberalization. Over the last five years, the country has entered into six Free Trade agreements with countries within ASEAN framework, with two of these being bilateral agreements. Negotiations are underway to sign twelve more pacts with neighbouring countries in the coming years. Within the Asia-Pacific region Singapore has entered 18 agreements which involve 24 of its major trading partners. Singapore is a key member of nations that are working on the formation of Trans-Pacific Partnership deal. Singapore’s legal system with regard to bankruptcy, company laws and capital market is still not based on international best practice. The government tries to enhance their implementation by appointing ad hoc judges to commercial courts to promote their application as part of the country’s legal framework (Dean 2010). Competition laws and regulations have been strengthened over the last five years though not major changes have taken place. There are still inherent shields against competition still existent in some areas. Political Environment There are still many hindrances to business in Singapore that are politically instigated. There many policies and procedures that do not allow the market system to operate freely. Some of these bureaucracies are discussed herein. One of the political interferences to the market system is the price control on some commodities. Unfortunately automobiles are among those. The company may find it challenging to operate in such an environment. Other related products with these regulations include electricity and liquefied petroleum gas (Dean 2010). The government has also put regulations on mergers and acquisitions. Usually consent of 75% of shareholders is required to form a merger. There are legal provisions that protect the minority shareholders which makes hostile acquisition almost impossible. There exists an Anti-Monopoly and Unfair Competition Law that makes illegal for any company to hold 50% of the domestic market or even a scenario where two or three companies hold 75% of the market share between them. All contracts that lead to monopoly are prohibited and cannot exist in the economy. Small scale operators and cooperatives are exempted from these restrictions as the legislation recognizes them as institutions producing vital commodities for use by members of the society. However, this exemption makes the playing ground not to be fair on the side of large multinationals. Tax practice in the country has its hinges as well. For instance the country has many tax treaties with certain countries and companies that hail from these countries are accorded preferential treatment in tax payment. The law divides corporations as resident and non-resident. All companies are entitled to 25% income tax but resident companies have a 50% waiver on condition that they reach the threshold for the required market coverage. Another unfair attribute in this country’s tax system is the capital gains tax. In fact it attracts the same level of tax rate as normal income. Singapore has lived to the call of the environmental conservation as per provisions of World Trade Organization. Due to this reason there are import prohibitions for some commodities like chewing gum unless for medical uses, motor vehicles that have been used for more than three years. Singapore has tough authorization procedures for imports for sensitive products. Imports of rice, for example, are managed as a measure to ensure country’s food security. Under this system importers are mandated to stock merchandise of rice that is equivalent to two months of imports. Singapore levies tariffs on six specific lines with determined rates and this ensures openness in foreign trade practice. Partners of Free Trade Agreement are exempt from these tariffs. Up to 30% of tariff rates are administered on a range of between 0-10%. Singapore has made significant steps in automating customs activities. Licensed traders are able to submit import documentation and permits electronically under what is termed as single window system. The single window enables online interconnection of government agencies that take part in authorization of imports. This system reduces bulk, bureaucracy and saves time. Many other related initiatives have been introduced to streamline trade. Lately, traders have the option of applying for binding advance rulings on valuation of customs. In an effort to improve the administration of intellectual property rights, the Patents Act of 2008 was amended in line with the Doha Declaration on the TRIPS Agreement and Public Health. Singapore is now able to use the system as an importer. Market Entry Strategies A great deal of effort is required when selling directly to Singapore. Motor vehicles have limited number of customers hence some form of direct marketing strategies would work best. Since most of the vehicles sold in Singapore are imported from Asian countries, such as Japan and China, there exist stable market structures in the industry. There numerous distributors who assist manufacturers reach their customers. Being the first time to sell in this market hiring the services of these distributors would prove worthwhile. The company will engage a Singapore distribution company. This approach will provide the company with control over the marketing efforts in Singapore and improve chances of creating brand identity. To ensure that the extensive market is well served, the choice of the distributor will be based on its ability to cover different regions of the country. The first duty will be an extensive advertising campaign. Since the products are new in the market it would be prudent to conduct an informative as well as persuasive advertising. To promote the understanding of the new market in Singapore a number of strategies will be adopted. The distribution company will conduct a market survey to determine feelings and perceptions of customers regarding the model of vehicles sold in Singapore and how well they would like services to be improved. The company would also participate in trade shows organized by either government or business community. Credit Financed Investments The government of Singapore offers facilitation to private investors through provision of financial support. Singapore has crafted a number of programs to enable private investors expand their operations in foreign territories. These initiatives are specifically applicable for export finance only. The government also acts as an underwriter for loans aimed for overseas trade operations. There are strategic incentives for foreign and local financial institutions subject to fulfillment of necessary requirements. Singapore is working on improvement of banking sector to promote capital adequacy and ensure that the sector can stand even in times of poor economic status. In the area of asset management, Singapore is working on relevant institutions to strengthen its position regionally and hence attract high value firms. The company will take advantage of these attributes to obtain credit that will enable to fund various market entry strategies. Critical Success Factors Industrial policy is designed to create a sustainable manufacturing base. Singapore is set to shift from labour intensive production to capital intensive methods in order to attain high value addition. Policies that define land use and labour have been fine-tuned to further promote production. Anticipated population growth is a good pointer to increased aggregate demand. According to United Nation’s projections, the population of Singapore will continue on the rise going forward with an anticipated increase of over 6 million people before the year 2030. Population represents market and hence its growth cannot be slighted by marketers. According to the same report the income of households will continue to be on the rise, with the world economy having successfully negotiated the crisis of 2008. Income levels of persons living in developing countries are expected to rise by 7% while that of residents in developed nations will rise by 2%. References Crawford, M & Benedetto, AD 2006, ‘New Products Management, Boston, MA: McGraw Hill. Emden, Z, Calantone, RJ & Droge, C 2006, ‘Collaborating for New Product Development: Selecting the Partner with Maximum Potential to Create Value,’ Journal of Product Innovation Management, Vol. 23, pp.330-341. Dean, G 2010, ‘Joint Venture or 100 per cent Foreign-Owned?,’ OzIndo, Vol. 6, No. 4. Goldenberg, J, Lehmann, DR & Mazursky, D 2001 ‘The Idea Itself and the Circumstances of Its Emergence as Predictors of New Product Success,’ Management Science 47, 69-84. Ozer, M 2005, ‘Factors Which Influence Decision Marking in New Product Evaluation,’ European Journal of Operational Research 163, 784-801. Pride & Ferrel, 2003, Marketing Principles, sixth edition. Read More