China Unicom's Entrance in Brazil for Mobile Network - Business Plan Example

China Unicom’s Entrance in Brazil for Mobile Network Table of Contents Introduction 4 1 Background 4 2 Aims and Objectives 4 2. China Unicom 52.1 Introduction 5 2.2 Customer Segmentation 6 2.3 Enterprise Culture and Relationship 7 2.4 Global Marketing Experience 7 2.5 Why to Explore the Emerging Market 8 3. Mobile Service Market in Brazil 8 3.1 Market Background 8 3.2 Political Environment 9 3.3 Economic Environment 10 4. Challenges and Risks in Brazilian Mobile Service Market 10 4.1 Strengths and Opportunities of China Unicom 10 4.2 Challenges in Brazil 11 4.3 Risk Analysis 11 4.4 Competition 12 5. China Unicom’s Entry Strategic Plan 12 5.1 Product Segmentation 12 5.2 Customer Behaviour 13 5.3 Distribution Channel 13 5.4 Risk Mitigation 14 5.5 Political Implementation 14 6. Conclusion and Recommendations 16 References 17 1. Introduction 1.1 Background In relation to the recent phenomenon of the unconventional business environment, organisations are often recognised to expand their business subsidiaries across different foreign business markets. Moreover, the rapid pace in economic stabilisation of the global countries has long been witnessed to motivate the global marketers for implementing aggressive expansion strategy in order to strengthen their global presence and sustainability in any business industry. In this similar context, Brazil can be duly considered as one of the major and highly preferred business locations for the global marketers while intending to expand their respective business subsidiaries (Rugraff & Hansen, 2011). According to the present day context, Brazil has been identified to attain greater interests of the global marketers to extend their business locations. This can be justified with reference to the fact that the promising growth in the economic conditions and the continuous refurbishment of the political environment of the country has long been identified to provide greater leverage to the foreign marketers while targeting to expand business units into Brazil. Moreover, the deregulation of policies and the continuous development of the trade infrastructure facilities can also be considered as few of the major beneficial aspects of Brazil to attract the foreign marketers (The World Bank 2013). 1.2 Aims and Objectives Emphasising the increased level in business expansion by the international marketers, the essay intends to critically understand the rising opportunity and develop an effective country analysis for China United Network Communications Group Co. Ltd (China Unicom) in the Brazilian telecom business industry. In this regard, the aims and objectives of this research are to analyse the economic environment and also the current trend of the telecom industry prevailing in the respective business location. Moreover, the identification of certain specific issues along with challenges persisting in the respective industry as well as in the country or the business market is also the other aim and objective of this research. Moreover, the essay would also focus on demonstrating the current political environment of Brazil and prepare a relevant entry strategy for China Unicom. 2. China Unicom 2.1 Introduction Officially established in the year 2009, China United Network Communications Group Co. Ltd (China Unicom) is regarded as one of the leading and dominant telecom service providers across the globe. The organisation is recognised as the merger of the leading telecom service provider of China Netcom and previously developed China Unicom. The organisation is widely renowned as one of the dominant telecom service providers in terms of providing an extensive fixed-line network across its widely accessed global subsidiaries. Moreover, China Unicom is also observed in offering its range of high-speed along with higher-capacity based transmission networks to its global customers. During the year 2008, the company was able to gain its assets beyond 5 hundred billion Yuan and also recorded to incorporate in excess of 460,000 global employees across its different business units located around the world (China Unicom, 2012). In relation to the business strategies, China Unicom is highly committed to recognise itself as the dominant player in terms of offering broad-band communication services to a huge number of global users. In order to achieve the desired operational goals, the company prioritises on streamlining its leadership roles and improving its brand image in the global telecom service business industry (China Unicom (Hong Kong) Limited, 2012). 2.2 Customer Segmentation In relation to analyse the current business strategies of China Unicom, it can be viewed that growing interests of segmenting customers have radically improved the performance of the organisation towards the accomplishment of its desired objectives. In this regard, the customer segmentation strategy of the organisation is centrally focused on demarcating exceptional sets of telecommunication products and/or services in accordance with the needs and the expectations of the potential customers. This particular strategy significantly helps China Unicom to precisely address the actual needs and desires of the customers while delivering its range of telecom services. Additionally, the segmentation strategy also provides China Unicom to develop its existing products or services in line with the changing trends of the customers. In this context, a wider practice of demographical segmentation strategy can be apparently observed to help the organisation in differentiating its valuable customers in line with their age and income level. Furthermore, the segmentation strategy of China Unicom can also be observed to work upon the changing trends of the youth customers and their preferences towards the telecom services. Therefore, it can be affirmed that the segmentation strategy of the company can be regarded as one of the competitive decisions, which enabled China Unicom to gain superior competitive position in the respective industry (ShuiXiu & ShuiHua, 2010). 2.3 Enterprise Culture and Relationship According to the business performance of China Unicom, it can be widely accepted that the operational and the management functions of the organisation incorporate an exceptional culture and relationship with every organisational member. It is worth mentioning in this similar concern that the Human Resource (HR) policies and the practices of the organisation considerably focuses on privileging equalities of each employee regardless of their demographic differences including age, gender, race, linguistic disparities and ethnicity. Moreover, the policies also ensure to protect employees from different issues associated with discrimination and provide equal opportunities to them in developing their individual career and personal growth. Moreover, the activities associated with corporate governance of China Unicom also ensures to build strong relationship with the external stakeholder groups including investors, shareholders and more significantly the communities in which the organisation tends to provide its range of telecom services (Giao & Filho, n.d.). 2.4 Global Marketing Experience By taking into concern the prevalence of greater business market competition in the global telecommunication industry, it can be affirmed that the marketing strategies and practices have long been recognised to play a decisive role for the organisations to gain sustainable position. In relation to the marketing experiences of China Unicom, the organisation tends to adopt and apply number of effective strategies and practices, ensuring to obtain greater competitive advantage. In this similar context, the marketing strategies of the company involve advertising and promoting its range of exceptional telecom services through different channels. Moreover, marketing practices towards the development of the brand also provide adequate support to China Unicom in strengthening its global client base. Additionally, promoting telecommunication products/services through social media also assists the company in maintaining its long-term sustainability in the respective industry (Giao & Filho, n.d.). 2.5 Why to Explore the Emerging Market The organisations in this unconventional business environment are often observed to expand their business operations in overseas locations for the purpose of leveraging their competitive position in the global market. The aggressive expansion of business units in international markets broadly influences the capability of the organisations and enables to reinforce sustainability even in the highly competitive business industry (Lymbersky, 2008). In relation to the business strategies of China Unicom, the continuous expansion of the business units into different geographical locations can be regarded as one of its major decisions. Currently, the organisation has been providing its range of telecommunication products and/or services across 31 provinces located in Mainland China and other international destinations (China Unicom, 2012). 3. Mobile Service Market in Brazil 3.1 Market Background The telecommunication marketers in this respective business location are highly focused on attaining superior competitive position through delivering next generation products/services to extensive number of valuable clients. The trend of advanced or next generation based telecom services of the organisations are significantly influenced by the promotion of 4G LTE services and rapidly developing broad-band service facilities. Moreover, the telecom service providers are also likely to deliver value-added services that significantly enabled the mobile communication service based organisations to build strong pre-paid centric market environment. In relation to the present day context, the telecommunication market of Brazil has been recognised to achieve higher mobile penetration rate including urban, sub-urban and rural areas across the nation (Alencar, 2005). 3.2 Political Environment According to the present telecommunication service market of Brazil, the changing political conditions and greater flexibility of the foreign investors in investing substantially can be regarded as the major driving political factors. The refurbishment of international trade policies and greater focus on encouraging international marketers can be apparently observed towards raising the current economic performance of Brazil. The telecom service market of Brazil can be duly considered to achieve rapid transformation with the thriving performance of both local and foreign entrepreneurs. Therefore, the political condition of Brazil can be identified as one of the major encouraging factors for China Unicom to successfully enter into the competitive telecommunication market prevailing in the nation (Possas & et al, n.d.). 3.3 Economic Environment The current economic environment prevailing at Brazil can also be regarded as one of the major encouraging factors for the foreign entrepreneurs. With respect to the past few decades, the economic environment of Brazil has been witnessed to achieve long-term financial growth in terms of Gross Domestic Product (GDP), currency rate, lower interest rates and higher growth of middle-income level populaces (Rodriguez 2005). 4. Challenges and Risks in Brazilian Mobile Service Market 4.1 Strengths and Opportunities of China Unicom It can be affirmed that the continuous innovation of providing exceptional mobile communication and other telecom services to diverse customer groups is regarded as one of the major strengths of China Unicom. In this similar context, the innovation of telecom services in accordance with the expectations of the changing customer trends can be duly considered as one of the imperative aspects for successfully practicing effective business operations in the Brazilian market. Additionally, providing services to the customers in accordance with their preferences can also provide adequate support to China Unicom to successfully accomplish its desired business objectives in the Brazilian market. In relation to determine the current opportunities, the growing number of the customers accessing telecommunication services along with their compliance regarding the same would certainly facilitate China Unicom to obtain its operational and financial goals (China Unicom (Hong Kong) Limited, 2012). 4.2 Challenges in Brazil Although the telecom service industry of Brazil tends to provide adequate opportunities for the foreign marketers, the country also possess certain major dimensions that can negatively influence the global entrepreneurs to successfully achieve their desired business objectives. In relation to the current complexities prevalent in the political environment, the excessive governmental policies and norms can be a major influencing factor for China Unicom. Additionally, undeveloped infrastructure facilities along with scarce utilisation of resources may also impose extensive impact on China Unicom while entering into the competitive Brazilian telecom service industry (Rodriguez 2005). Additionally, extensive complexities within the tax policies and increasing rate of tax rates for the foreign entrepreneurs can also be a major influencing dimension for China Unicom to build strong and sustainable position in Brazil (China Unicom, 2012). 4.3 Risk Analysis The unpredicted fluctuations in economic growth along with changing trends in the telecommunication services can be duly considered as few of the major risks that can severely impact on China Unicom while entering the Brazilian market. It has been previously mentioned that the political challenges in the Brazilian business environment can impose negative impact on China Unicom in obtaining adequate return of its investments. Nevertheless, the scarce utilisation of the accessible resources along with the undeveloped infrastructure facilities within the telecom industry of Brazil may also create significant risk for China Unicom to face challenges in sustaining in the respective business market (China Unicom (Hong Kong) Limited, 2012). 4.4 Competition According to the current telecommunication service market of Brazil, a growing interest of merger along with strategic alliance of the telecom service providers can be duly considered in intensifying the competition level. Moreover, the continuous promotion and deliverance of advanced telecommunication services including mobile and broad-band services also increased the competition prevailing amid the players serving in the Brazilian telecommunication service market (China Unicom (Hong Kong) Limited, 2012). 5. China Unicom’s Entry Strategic Plan 5.1 Product Segmentation The strategy of segmenting the range of telecommunication products and/or services can be a major strategic focused area for China Unicom while entering into the Brazilian telecommunication business market. In order to gain substantial benefits, the segmentation strategy of the company would be focused on demarcating customers with respect to their demographic variance. In this context, the company would centrally focus especially on the youth customer segment through providing exceptional telecom services as per their desires and needs. This particular strategy would certainly enable China Unicom to obtain a huge amount of potential customers during the initial stage of entering into the Brazilian telecommunication service market. 5.2 Customer Behaviour Providing adequate support to the customers would be considered as a major strategic priority for China Unicom while entering into the competitive Brazilian business market. In order to build strong and loyal customer base, the business strategy of the company would highly focus on performing customer-centric practices through addressing their desired needs and expectations while procuring any telecommunication product and/or service. Therefore, the company would significantly focus on developing effective customer service facilities in order to proactively address their needs and make them satisfied through offering them with their required telecommunication services. Moreover, the telecommunication services would also incorporate certain adequate value-added services that can further increase the capability of China Unicom to raise its customer base by a considerable extent. 5.3 Distribution Channel In order to successfully build a strong position, the initial start-up stage would be focusing on performing business activities through joint-venture strategy. In this context, the joint-venture strategy would provide extensive support to China Unicom in terms of delivering the required products/services to wide range of customers across different locations in Brazil in a timely manner. Moreover, the strategy would also enable the organisation to promote its exceptional telecommunication services for addressing the needs and desires of the potential customers. After gaining feasible growth, the business strategy of China Unicom would further focus on developing independent position through structuring its own subsidiary in the respective location. 5.4 Risk Mitigation The risk mitigation strategy of China Unicom would be complying with its own strategic approach after gaining strong client base in the Brazilian market. In relation to the current business strategies of the company, China Unicom incorporates a wide strategic approach, which highly complies with an effective set of measures that protect the organisation from different industry or country related risks and challenges. In order to mitigate risks associated with political and legal issues, the business strategy of the organisation would focus on ensuring adequate compliance with the governmental regulations while delivering telecommunication services to the Brazilian customers. Moreover, the implementation of effective customer service strategy would further enable the company to minimise different risks associated with changing trends and fluctuating demands of the users in the respective market. 5.5 Political Implementation In the context of political implementation, the business strategy of China Unicom generally incorporates adequate principles that ensure to build strong alliance with the governmental regulations and policies. Therefore, the company can successfully mitigate any political issue, which might rise while practicing telecommunication business in the Brazilian market. Moreover, the company would also focus on building strong relationship and strategic alliance with the standards of Brazil Telecom Regulatory Authorities (BTRA), which can enable China Unicom to successfully provide its range of exceptional telecommunication services to the customers. 6. Conclusion and Recommendations With reference to the unconventional business strategies of the global marketers, a growing interest of extending business subsidiaries in different emerging markets can be apparently observed. In relation to the critical observation of the current political and economic environment prevailing at Brazil, the establishment of business subsidiaries in the Brazilian telecommunication service market would be a major opportunity for China Unicom to sustain its dominant position. Moreover, the growing trend of using advanced telecommunication networking services and changing demand of the customers would also certainly enable the organisation to attain superior competitive position in the respective business location. However, the business performance of China Unicom may also face certain challenges while entering in the Brazilian telecommunication service market. In this context, the company can face significant challenges relating to excessive governmental regulations, growing interest rates along with ineffective infrastructures and scarce utilisation of accessible resources. In order to reduce the above depicted potential threats or challenges, the policy of building strategic alliance of the organisational business standards with the governmental regulations would protect China Unicom to successfully enter and perform its range of business operations effectively. Moreover, the strategy of making continuous development in diverse infrastructure facilities would further facilitate the company to avert the risks that might generate due to ineffective utilisation of accessible resources. References Alencar, M. S. (2005). ‘Piazza – Information on the Brazilian Telecommunications Society’. The Journal of the Brazilian Telecommunications Society (JBTS), pp. 1-4. China Unicom. (2012). ‘About Us’. Corporate Profile [online] Available from [30 Dec. 2013] China Unicom (Hong Kong) Limited (2012) Annual Report 2012. Hong Kong: China Unicom (Hong Kong) Limited. Giao, P. R. & Filho, J. R. V. (n.d.) Competition in Brazilian Telecom Market: An Emerging Market Experience. Freien University Berlin pp. 1-12. Lymbersky, C. (2008). Market Entry Strategies: Text, Cases and Readings in Market Entry Management. Germany: Management Laboratory Press. Possas, M. & et al (n.d.). ‘Regulating Competition in Oligopoly: The Case of Telecommunications in Brazil’. Regulating Competition in Oligopoly pp. 1-30. Rodriguez, S. P. (2005) ‘Institutional Environment Relatedness and Foreign Investment Failures in the Brazilian Telecommunications Industry’ Academy of Management Best Conference Paper, pp. T1-T6 Rugraff, E. & Hansen, M. W. (2011). Multinational Corporations and Local Firms in Emerging Economies. Amsterdam: Amsterdam University Press. ShuiXiu, L. & ShuiHua, H. (2010) Classifying the segmentation of Telecom Customer Value [online] available from [31 December 2013] The World Bank. (2013). ‘Economy Profile: Brazil’. Doing Business 2014, pp. 1-112. Read More