Evaluating International Markets: Management Brief

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Management Brief代写 Evaluating International Markets: Management Brief:In this paper, a comprehensive market penetration strategy is presented.

 

Abstract

Modern businesses are extending their operations to the global market. The success in the international market is dependent on the robustness of the strategy used. In this paper, a comprehensive market penetration strategy is presented. The paper identifies Chile as the target market to sell Huawei mobile phones. The justification for the chosen market is offered using statistical data on the market performance as well as by the use of PESTEL Analysis and Porter’s Diamond Model. The entry mode is also presented for the three countries. The paper ends with the evaluation of the barriers and challenges of in the international target market. Overall, the work is an enquiry about the market and assists in making a strategic decision.

Evaluating International Markets: Management Brief

Introduction and Background  Management Brief代写

According to a report by CompTIA (2019), the digital technology industry is at the pace to reach $5.2 trillion in 2020. The growth is attributed to the enormous shift of people’s life which is now more digital dependent. Mobile phones are most demanded owing to the change in people’s lifestyle and hence, has become a norm in communication. Besides, an increase in disposable income has raised the probability of people spending more on media, entertainment, and networking as well as mobile technologies.    Management Brief代写**范文

These needs have resulted in the demand for smartphones, tablets, laptops, and gaming consoles. Growth in the market is also supported by the increase in global literacy and population. Innovations that have been built over time have powered digital technology growth. People are becoming more connected than before, and the mode of doing things are automated. These have presented business opportunities to investors. Therefore, for the entrepreneur to capture value in the international market, a winning strategy is required to enter the target region.

Additionally, as people integrate their activities and life in digital technologies.  Management Brief代写

Especially mobile phones, the market for these technologies increase. The broad market becomes attractive to entrepreneurs who can enter in the industry to either make, sell or supply the devices. The emergence of m-commerce especially among the working population has also largely contributed to higher demand for smartphones with top-notch features that support m-commerce.    Management Brief代写**范文

Other key factors contributing to the growth of the global smartphone market include increased internet penetration, market activities by vendors, and high number of social media users. The phone technology sector is dominated by few players including Samsung, Huawei, and Apple, as shown in figure 1 below. These phone manufacturers identified a need in the market and offer products that seek to solve these problems, that is, ease of communication and socialization using social media platforms. They partner with distributors and franchises to reach the global market.

Management Brief代写
Management Brief代写

Figure 1: Source Statcounter GlobalStats

Therefore, the paper will evaluate an international market for investment.  

In so doing, a region is selected for penetration and position of the investment. The paper will demonstrate the most effective strategy and entry mode. Besides, it will inquire about the barriers and challenges in the identified market. These and other evaluating criteria will function as a guiding manual to the management for the establishment of the business.

Choice and Justification  Management Brief代写

The paper will evaluate Chilean market. Chile is a South American country in between the Andes and the Pacific Ocean. Asian Pacific is the most dominant market with estimated market share of 33.7 per cent in 2016. The market for North and Latin America amount to 17 per cent in 2016. Latin America, South, and North America are emerging economies, and smartphone demand potential is high and growing.

Chile has the highest smartphone uptake rate in Latin America. Management Brief代写

It is one of the most developed among the six countries in Latin America. The Subsecretaría de Telecomunicaciones (SUBTEL), a telecom regulator in the country, reported that more than 23 million mobile connections every month since 2012 in Chile (eMarketer, 2016a). The analysis also found that mobile phone users will continue to grow to 13 million users in 2016.

The phone user penetration was projected to be high to about 75.1 per cent by 2020, amounting to 13.7 million users, as shown in figure 2 below. Mainly, Huawei is the second-largest brand in the country after Samsung, with a market share of 23.75 per cent (Statcounter GlobalStat, 2019). The market share for Huawei mobile is an indication that the brand has the potential to grow and be the most preferred brand by consumers in the country.

Management Brief代写
Management Brief代写

Figure 2: Source: eMarketer

Overall, Huawei’s market is ever expanding in the global market.  Management Brief代写

Baugh (2018) reported that Huawei had overtaken Apple to become the second-largest smartphone vendor in the world. The report by Canalys (2018) indicated that Huawei shipped 54 million handsets in Q2 2018 and which was a 41 per cent increase from the previous period as shown in figure 3 below. The rise in popularity was partly attributed to its P20 and P9 devices. The increase in market share portrays Huawei brand strengthening brand image in the international market. Investors have opportunity to grow with the brand and penetrate new markets and expand existing ones.

Figure 3
Figure 3

: Source: Canalys

PESTEL Analysis  Management Brief代写

PESTEL Analysis is a strategic tool that is used to analyse macro-environment of an organisation. It is an abbreviation for Political, Economic, Social, Technological, Environmental & Legal factors that impact business organisations. The changes in macro environment have direct impact on the not only foreign businesses but also local ones. These factors also affect the Porter Five Forces that shape strategy and competitive landscape. They have both direct and indirect effects on firm’s competitive advantage and overall profitability level.    Management Brief代写**范文

Therefore, PESTEL analysis provides the detailed of the expected operation challenges that Huawei should anticipate to encounter in Chile. For instance, the market may be highly profitable and with future growth prospects but it would not be attractive to foreign companies if political system is unstable.

a. Political factors  Management Brief代写

These play a critical role in determining the factors that will impact on Huawei profitability. Huawei a multinational company operating many countries in the world and hence exposure to different political systems and environments make it prevalent to market risks. To be successful in myriads of the political order in smartphone industry in the various country require it to diversify the systematic risks of political environment.    Management Brief代写**范文

Chile is one of the most stable and prosperous countries in South America (Jeong, 2013). The country is free from coups and arbitrary governments. It is a multi-ethics society with people of European and Indian ancestry living in harmony and peace. The country is considered the least corrupt in the region and people enjoy civil rights and political liberty freedom. Political stability has attracted foreign direct investment to the country.

b. Economic Factor  Management Brief代写

Such factors as inflation, savings, interest, and exchange rates as well as economic cycle determine the total demand and investment in an economy. Huawei should use such factors as growth rate, inflation & industry’s economic indicators on industry growth rate, consumer spending among others to predict the future of the market in the country.  Businesses experience financial freedom with ease of access to capital and healthy labour supply.    Management Brief代写**范文

The tax rate of 17 per cent is also favourable to companies. The tax is lower in comparison to profits, and compliance hours are the lowest in Latin America (Bernardi, Barreix, Marenzi, & Profeta, 2013). The economy is growing steadily at a rate of over 1.3 per cent. The unemployment rate stood at 6.49 per cent of labour forces and is reducing. Overall, the economy of Chile is favourable for business growth.

c. Social factors  Management Brief代写

How people go about their things is dependent on culture, values and beliefs. People are an essential part of the business and hence societal culture impact on businesses. They influence marketers choices and approaches in marketing strategies. The population of Chile about 15 million people. The population growth rate has been declining since 1990s. More than 80 per cent of the population lives in urban areas. More than 60 per cent of the people is between 15 years and 65 years.    Management Brief代写**范文

The ratio between men is to men is roughly one is to one. The largest ethnic groups are the white and mestizo forming 95 per cent of the population. The literacy level stands at 96.7 per cent is rising. It thus means there are skills to provide required labour. The society is divided into three groups including upper class, middle class and lower class. Wealth and social status determine the levels. Chile has a moderate cultural distance compared to Brazil. The various social factors reveal Chile to have favorable market.

d. Technological factors  Management Brief代写

Technology is a disruption to the businesses particular the high-technology companies like Huawei. Smartphone technology is changing rapidly. Three companies dominate the market, including Huawei, Samsung and Apple. The analysis of a country’s technological analysis should focus on its disruption in the industry. Slow technology adoption is better for high-technology companies. Chilean loves expensive phone and hence the market for smartphone is declining. The sales dropped from 8.35 million in 2018 to 8.2 in 2019 (Best Terrace Decking Research Department, 2014). Nonetheless the prospects of premium smartphones are high and expected to reach 9 million by 2020.

e. Environmental factors  Management Brief代写

Different countries have different ecological regulations that can impact company’s profitability. States regulate environmental factors using laws and regulations. Various issues affect Chilean market. It is affected by multiple problems including air, water, and noise pollution, garbage disposal, wildland conservation, and soil degradation (Bernhardson, n.d). Overall, little has been done to reduce environmental pollution. Businesses have the role to play in conserving the environment through CSR towards the attainment of greener environment.

f. Legal factors

A company has to carefully assess the legal environment to ascertain its safety in the foreign market. Chile is a democratic country, and it is governed by the rule of law (Gomez, 2005). The law protects everyone and businesses. Discrimination of any form is prohibited. Companies enjoy property right protection through strong property laws and regulations.

Porter Five Forces  Management Brief代写

Figure 3: Porter’s Diamond Model
Figure 3: Porter’s Diamond Model

Figure 3: Porter’s Diamond Model

Firm Strategy, Structure and Rivalry

The context in which companies operate to determine how they are created,organized and managed. The domestic rivalry in Chile is high due to the existence of other phone companies like Samsung and Apple. This competition will determine the Huawei entry strategy and capacity to withstand it.

Factor Conditions  Management Brief代写

It refers to the availability of resource needs for production. Huawei will be needing a human resource to establish and grow in the market. Chile has high literacy level, and hence skills availability is not limited.

Demand Conditions  

The demand affects profitability of companies. A large market is favourable. Chile is a large and growing market that will allow Huawei brand to continue growing. The need for premium smartphone is increasing while that of cheap one declining. Huawei is a diversified company and offers both upper scale and lower scale phones and hence fits well to the need of Chilean market.

Related and Supporting Industries  Management Brief代写

Support industries are essential for industry growth. Just like other companies in the industry, Huawei will need to create alliances and partnership with local firms for synergy in the market. They include the suppliers and distributors and particularly the telecommunication firms in Chile. The success of strategic partners will have an indirect impact on the success of Huawei.

Government

Governments in the model function as a catalyst and challenger to the market. According to Porter free market should not exist, and hence government regulations are necessary. In so doing it can create enabling environment through anti-trust laws and macroeconomic policies to stimulate the economy. Chilean government has supportive systems such reduced bureaucracy in tax payment, favourable import tariffs among others.

Chance  Management Brief代写

Though Porter did not ariginally insert it, Chance in the model acts as likelihood of external events such as war and natural disasters. They are unpredictable and hence Huawei will not be able to know their occurrence but should always have precautionary measures for hazards like insurance cover.

Strategy and Mode of Entry

The choice to enter the Chilean market fit the company’s strategy to expand.

Also, it is in line with the global trend in smartphone adoption and usages of internet and social media. Since the business opted to enter three markets in North and South America, various entry strategies will be used. The entry strategy varies in the context of the business environments and risks associated with the establishment and operations of the new business. Market entry mode is the different arrangements that a particular company has to transfer its products and resources as well as management to a foreign country. The choice of market entry mode depends on the level of involvement that the company seeks in the international target market.    Management Brief代写**范文

Therefore, the most profitable and risk-free entry mode is the acquisition of a franchise from the manufacturer. According to Borneck (2016), the franchise is essentially a contractual entry mode where a business entity is granted a license agreement to enter a market with relatively low risks can resource commitment. By choosing to operate a franchise with Huawei, the business will not only be granted a license but also help in design, equipment, organization, and marketing in the target market. The success of the operations in franchise is interdependent.

On the other hand, Chile has already established markets for Huawei mobile devices.  Management Brief代写

Huawei has a market share of about 7 per cent in Canada and 23 per cent in Chiles. The joint venture is the most effective and profitable mode of entry to these two markets. There are various reasons for this decision. First, there exist competitors in the market. Secondly, competition comes from other firms dealing with Huawei mobile phones as well as other mobile phone manufacturers and vendors such as Apple and Samsung. Thirdly, the business needs to establish a stronghold at the market by partnering with local companies for synergy and experience. Lastly, the new culture in the target market has an impact on business operations, primarily in human resource development.    Management Brief代写**范文

Management Brief代写
Management Brief代写

A joint venture is a business enterprise undertaken by two or more business or individuals to share costs and profits and increase synergy in the market.

It is a form of agreement rather than a business organization that is defined by timeframe and entered informally. The business will seek to create a venture with local firms to get experience. In particular, though promising to grow in future. The market share of 7 per cent that has grown slowly over the years makes the market risky to venture using direct investment. Also, the fact that there exist other businesses selling the product in the market, as well as competition from other products, require a massive investment in marketing and other resources such as online selling. As such, partnering with a local firm for a specified period will ensure the business becomes well oriented and acquainted with the market to learn its dynamics.

Moreover, franchise and joint venture entry modes have implications for the Human resource, global culture, and sustainability of the business.  Management Brief代写

The business needs to be aware of intercultural and cross-cultural communications between the company and its employees and managing external relationships with stakeholders especially consumers (De Mooij, 2019). The three target markets are not identical in terms of culture. Consequently, international business relations are enhanced when managerial, sales and technical personnel are trained to be aware of the communication difficulties and conflicts across cultures. It, therefore, a strategic plan for the business to approach target market fully aware of these cultural differences in human resources and consumers as well as other stakeholders.

Barriers and Challenges Faced  Management Brief代写

However, though Chile is one of the most stable and competitive countries in Latin America, there are many regulations and bureaucratic obstacles. The World Bank ranks Chile 55th in the world for the ease of starting a business (Spillan & Rahman, 2019). It roughly takes seven days to complete the process of a start-up. Besides bureaucratic processes, Chile is marred with many taxation payments. It is a welcoming environment to do business. However, there are few barriers, including the shortage of labour and cybercrimes targeting large corporations that may hinder the growth of companies in the country. In Chilean, Huawei company will have to withstand competition from other products like Apple and Samsung.    Management Brief代写**范文

Additionally, Brexit has a marginal and indirect effect on the target market. The impact of Brexit will be felt in these markets through its implications to China where Huawei company is centred (Lishan, 2018). The main result decreases in economic performance when U.K companies reduce operations due to uncertainties. The exchange rates for RMB is also likely to be affected with adverse effect being depreciation. It will affect exports and imports to and from China. Therefore, any move by Britain has an impact on China’s economy as well as its international trade.

References  Management Brief代写

Borneck, T. (2016). Evaluation of franchising as a mode of entry by analyzing Subway’s expansion strategy. GRIN Verlag.

Baugh, C. (2018). Huawei Overtakes Apple to Become Second-Largest Smartphone Vendor. Retrieved from https://www.iphoneincanada.ca/news/huawei-apple/

Bernardi, L., Barreix, A., Marenzi, A., & Profeta, P. (Eds.). (2013). Tax systems and tax reforms in Latin America. Routledge.

Best Terrace Decking Research Department. (2014). Chile smartphone users 2014-2020. Statista. Retrieved from https://bestterracedecking.com/statistics/494628/smartphone-users-in-chile/

Bernhardson, W. (n.d). Environmental issues in Chile. Retrieved from https://www.hachettebookgroup.com/travel/trip-ideas/environmental-issues-in-chile/

Canalys. (2018). Huawei overtakes Apple to become the number two smartphone vendor in Q2 2018. Canalys. Retrieved from https://www.canalys.com/newsroom/huawei-overtakes-apple-to-become-number-two-smartphone-vendor-in-q2-2018?campaignname=huaweibeatsapple

CompTIA. (2019). IT industry outlook, 2020. Retrieved from https://comptiacdn.azureedge.net/webcontent/docs/default-source/research-reports/comptia-it-industry-outlook-2020.pdf?sfvrsn=8869ad68_0

De Mooij, M. (2019). Consumer behavior and culture: Consequences for global marketing and advertising. SAGE Publications Limited.

eMarketer. (2016a). Chile’s mobile market is small but advanced. eMarketer. Retrieved from https://www.emarketer.com/Article/Chiles-Mobile-Market-Small-Advanced/1014241

Gomez, E., S. (2005). Essential issues of the Chilean legal system. Retrieved from https://nyulawglobal.org/globalex/Chile.html

Jeong, H. (2013). Political Dynamic and the Welfare State in Chile under Economic Globalization. The Korean Journal of International Studies, 11(1), 201-234.

Lishan, Z. (2018). The impacts of Brexit on China. 2018 2nd International Conference on Management, Education, and Social Science. DOI: 10.2991/icmess-18.2018.278.

Spillan, J. E., & Rahman, M. N. (2020). Doing Business in Chile and Peru. Springer Books.

Statcounter GlobalStat. (2019). Mobile vendor market shares Chile Oct 2018 – Oct 2019. Retrieved from https://gs.statcounter.com/vendor-market-share/mobile/chile

 

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