International Business Project for Market Entry - Example

International Business Project: Market Entry Report Name Institution Table of Contents Table of Contents 2 Introduction 3 Al Ghandi Auto Group 3 Country and Market Analysis 4 Political Factors 4 Technological factors 4 Inflation rates 4 Corruption level 5 Level of competition 5 Product availability to meet customer needs 5 Trade barriers 5 Labour availability 6 Cost of establishment 6 Infrastructure 6 Marketing Mix 6 Product 6 Price 6 Place 7 Promotion 7 Staffing policy 7 Market Entry Strategy 7 Exporting 7 Wholly-Owned Foreign Direct Investment 8 International Joint Venture 8 Licencing 9 Mergers and acquisition 9 Partnership 9 Strategy for international business operations 10 Global Standardization 10 Conclusion 10 References 11 International Business Project: Market Entry Report Introduction Currently, more and more firms are opting to internationalize more rapidly than ever before (Chetty and Campbell, 2003). An organisation can choose to expand and grow its operations by reaching markets that are found beyond its national boundaries and makes a decision on the mode of entry to be employed (Chetty and Campbell, 2003). With globalization and liberalization, it is not difficult for companies to enter into new markets. The expansion of companies into international markets can be found to be beneficial for the foreign company and to the domestic market. The idea of internalization by foreign companies sound promising for both the company and the new market but it is not as easy as it sounds (Chetty and Campbell, 2003). This is attributable to the fact that every market is different in relation to economy, political, regulation and policies, technology and culture. This paper will provide a company background of Al Ghandi Auto Group and will analyse the suitability of Australia as the potential market for the company. The paper will also detail out the market entry strategies that can be used by Al Ghandi Auto to enter into Australia. Al Ghandi Auto Group Al Ghandi Auto is considered the leading General Motors Company that deals with Chevrolet and GMC in Dubai as well as northern emirates (Al Ghandi Auto, 2012). The company has grown to become the largest automobile in UAE which offer world class automotive products and services. Al Ghandi Auto Group has more than 13 companies that are found in GCC region, East Africa and also India. The company has been in operation for more than 50 years and has employed about 1000 highly qualified employees within its regions of operations (Al Ghandi Auto, 2012). The mission of the company is to offer innovative and impeccable products and services to the customers that offer value for their money. Al Ghandi Auto Group is a family-owned company that was established by Saeed Mohamed Al Ghandi (Al Ghandi Auto, 2012). The company has the potential to expand its operation in other markets across the globe that will enable it increase its market coverage thereby increasing its revenue and profits. Country and Market Analysis Political Factors The political and legal environment of Australia is very important with regard to global marketing (Invest Australia, 2003). The country has a stable political system that favours businesses. The suitability score is 7. Technological factors Australia is among the leaders in technological advancement. It also has the highest spending directed towards technology (Invest Australia, 2003). In addition, Australia is an ideal country for carrying out tests regarding new information technology and therefore a suitable region for automotive operations. The suitability score is 7. Inflation rates Monetary stability in Australia has been well maintained having its inflationary pressures put under control. This has been supported by the sensible banking principles as well as the available lending practices (Invest Australia, 2003). As a result the country has low inflation rates. The suitability score is 8. Corruption level .Australia is well known for its stable judiciary which is transparent and independent and is recorded to have an overall low level of corruption (Invest Australia, 2003). The Australia state has a code that insures cases of bribery imposed on both the foreign as well as domestic public administrators. Each Australian state has its own anti-corruption provisions. Suitability score for this factor is 8. Level of competition There are many auto motors companies in Australia that can offer immense competition to Al Ghandi Auto Group. Some of these companies include Mitsubishi Motors Australia, Toyota Australia, Volkswagen Automotive, Ford Australia and British Motors Corporation among others (Invest Australia, 2003). The suitability score with regard to this factor is 3. Product availability to meet customer needs Australian population has shown to having a taste and preference for small comfortable cars (Invest Australia, 2003). Since Al Ghandi deals with Chevrolet and GMC, the country is a suitable market for its products and thus the suitability score is 7. Trade barriers Australia is among the countries that are considered to having a free economy. The country has few trade barriers in order to encourage foreign investments and international operations (Invest Australia, 2003). This is beneficial to international companies that want to operate in Australia. The suitability score is 7. Labour availability In the current years, Australia has increased in population to more than 23 million people (Invest Australia, 2003). Over the years, unemployment rate in the country has decreased significantly and the gross per capita income has increased constantly. This shows that there is labour availability in the country making the suitability score of 7. Cost of establishment The capital needed to establish Al Ghandi Auto Group in Australia is very high due to equipment and machine purchase needed, space booking and labour pay to name a few. The suitability score is therefore 4. Infrastructure There has been a rise in the accessibility to various transport services due to the improvement of road, railway and telecommunication networks (Invest Australia, 2003). Australia also has a sound infrastructure investment as well as usage policies. This has a suitability score of 7. Marketing Mix Product Al Ghandi Auto Company deals with Chevrolet and GMC (Al Ghandi Auto, 2012). The company has had the capacity to deliver quality to the consumers. They have produced cars with positive features such as fuel efficiency and durability. Price Prices of Al Ghandi vehicles vary depending on the model, series as well as the extras customers intend to buy. In order to cater for larger market needs, the company has low priced cars. It also offer loan deals and discounts to enable buyers afford purchase (Al Ghandi Auto, 2012). Place Al Ghandi has manufacturing facilities in different parts of UAE country (Al Ghandi Auto, 2012). In addition, it has some facilities in Africa as well as in India. In addition, the company has more than 1000 dealers operating in different regions who can sell their products to the customers. Promotion Promotion of Al Ghandi vehicles is conducted through the internet and carries out direct marketing technique. In addition, the company also makes use of trade fairs and exhibition where they showcase their products with an aim of retaining their customers while creating new ones (Al Ghandi Auto, 2012). Staffing policy The Human Resource Management staffing policy to be implemented by Al Ghandi Auto Motors is the polycentric staffing where the home country individuals are assigned the top positions. This can facilitate organisational learning of the foreign market and will offer an opportunity for local individuals to improve their careers. Market Entry Strategy Exporting Exporting is a relatively easier method to expand operations in foreign markets. It has the potential economies of scope that result from production volume (Arthur et al., 2002). Exports are considered a low cost as well as low risk method of gaining entry to new markets. Under the condition of inadequate information and data from partners like the intermediaries and agents in the new markets, exporters are frequently faced with the risk of uncertainty when it comes to decision making (Arthur et al., 2002). In addition, the exporting firm may be required to depend highly on foreign agents due to the local political laws and regulations. Wholly-Owned Foreign Direct Investment Foreign investment is the investment of capital in a chosen business enterprise operating in foreign countries (Arthur et al., 2002). Many parent companies offer foreign direct investment for the purpose of adding expertise, products and technology. In addition, in contrast to exporters, foreign investors often receive tax incentives that are useful in business operation. In addition, another major benefit of wholly-owned foreign direct investment is the increase in income of the target country (Arthur et al., 2002). One disadvantage of foreign direct investment is the risk of political changes. Moreover, most risk factors are often extremely high causing damage to a foreign investor. International Joint Venture International joint venture is the collaboration of two or more partners from different jurisdictions with an aim of exchanging resources, divide profits and share risks. The advantages that came with this joint venture included: lowering of risks operations, better local market intelligence and increased profitability (Arthur et al., 2002). An international joint venture can be a frustrating experience and can at the end lead to failure if there is lack of adequate planning and positioning. Issues concerning market development, technology, regulatory uncertainties coupled with economic recessions are difficult to anticipate and can lead to debilitating impact on international joint venture (Arthur et al., 2002). In addition, management issues can hinder its activities in spite of administering mechanisms to resolve conflicts. Licencing International licencing reduces political risks when it comes to exports and it can easily reach new markets with limited restrictions. Licencing also is simple and fast to implement and requires less business costs (Arthur et al., 2002). Nevertheless, the disadvantages are that it is considered limited form of partnership and potential returns may be lost. Mergers and acquisition Mergers and acquisition are very beneficial in that they encourage and stimulate corporate governance and provide local knowledge (Arthur et al., 2002). In addition, it has the ability to boost services and brand image and recognition. Nevertheless, it is detrimental as it reduces competition and reduces quality. Partnership Partnership has the ability to improve brand value if the marketing capabilities of the two companies are high (Arthur et al., 2002). Risks and profits are shared among the two companies. However, just like mergers and acquisition, it reduces competition (Arthur et al., 2002). Partnership is the most promising mode of entry for Al Ghandi as it builds a business in a foreign country as quickly as possible but with some aspects of patience produced with a desire to minimize risk and uncertainties and to learn about an international country’s market from low level knowledge. Strategy for international business operations Global Standardization This is the ability to utilize standard marketing procedure internationally (Douglas, 2009). This means that a company uses the same marketing strategy across various countries. This strategy will be beneficial to Al Ghandi as it will not incur extra costs for special marketing. The company will still have the same effect in terms of its brand recognition in Australia just like it has in UAE. Conclusion The expansion of companies into international markets can be found to be beneficial for the foreign company and to the domestic market. Al Ghandi Auto Group has the potential to succeed in Australia due to favourable factors such as few trade barriers, political stability, infrastructure availability, technological advancement to name a few. Some of the entry modes that can be used by the company to enter Australia include merger and acquisition, partnership and exporting etc. Partnership will be the best option for the company due to its large range of benefits. Global Standardization strategy will be effective for Al Ghandi as it will not incur extra costs for special marketing. References Al Ghandi Auto. (2012). Welcome to the Al Ghandi Auto Group. Retrieved from www.alghandi.com Ben D., David J. & Arthur H. (2002). International M&A, Joint Ventures, and Beyond: Doing the Deal. Wiley: London. Chetty, S. & Campbell C. (2003). Paths to internationalisation among small-to medium-sized firms: a global versus regional approach. European Journal of Marketing, 37, 796-820. Douglas, S.P. (2009). ``Evolution of global marketing strategy: scale, scope and synergy''. Columbia Journal of World Business, Fall, pp. 47-59. Invest Australia. (2003). Australia: A Wealth of Opportunity. Canberra, ACT, Australia: Commonwealth of Australia. Read More