International Business: Executive Summary Assignment (Essay Sample)

Yonanas Marketing
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31st August 2013
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Executive Summary
This report explores the foreign marketing activities of Dragon International Group limited and a lot of emphasis placed on wooden classic boats.
The report first offers an overview of the company analysis, various entry modes, and their advantages, the best entry mode.
Further, the report incorporates a context analysis which analysis pest analysis, which includes political, economical, social, and technological analysis.
The report also undertakes a scale analysis in evaluating the level of risk, return, control, and integration in the Australian markets.
The report also offers some recommendations that the company can adopt to gain a competitive edge in the market and they include:
* More stringent quality control measures
* Takeover and acquisition of some firms that are performing poorly
Contents
TOC \o "1-3" \h \z \u
Executive Summary PAGEREF _Toc341528016 \h 2
Contents………………………………………………………………………………………… 3
Introduction4
Company analysis4
Modes of enrty advantages and disadvantages5
Total control5
Joint venture6
Contractual agreement6
The best enrty mode PAGEREF _Toc341528024 \h 7
Context analysis………………………………………………………………………………… 8
Political analysis PAGEREF _Toc341528025 \h 8
Economic analysis9
Social analysis9
Technological analysis PAGEREF _Toc341528028 \h 9
Scale analysis10
Risk10
Return10
Control10
Intergration10
Recommendation11
Strategic takeovers11
Enhancement of quality of their products11
References12
Introduction
It is always very good and advantageous for a company to enter and dominate a new territory. Some of the advantages of entering a foreign market include economy of scale and the technical knowledge about customer’s demands interests and preferences. According to Oghojafor 2012), economy of scale helps the company make high sales though at reduced and considerable prices to a large volume of consumers thereby maximizing profits returns. A company should be aware of the most demanded products, and preferences mostly known as fast moving products. As a result, it will be able to produce these products or services in quantity and quality standards and in the end witness massive profit. The advantages realized can be more fulfilling when a company enters completely new territory.
However, competition is always the main challenge as it will always be present in any given business. Therefore, to have a good strategy to counter competition is the key to success of a business. Circumspect strategy to enter a competitive market especially a foreign market is one of the best breakthroughs in a business (Oghojafor 2012). This paper analyses the best mode of entry into a foreign market for Dragon Group International Limited in successfully marketing their classic wooden boats at Australian markets.
Company analysis
Dragon Group International
Dragon Group International limited is a company that deals in sale and supply of electronics goods and products, mainly for computers and communication devices commonly regarded as semiconductors. The company has a variety of products and services therefore a consumer, computer, and communication industry. The main branch is located in Singapore with branches in various parts of the world like Malaysia Philippines’, Thailand, India, China, Hong Kong, Indonesia, and Korea. When it formed in the year 1990, its name was Fletch Holdings Limited. The name changed to Dragon group in the year 2007.
It is a subsidiary to ASTI holdings Limited. They have been awarded various awards for instance Renesas Overall champion, Renesas Regional Champion. Some of its semiconductors business includes applications in electronics for consumers’, processor peripherals, communication devices, LED products, sale of electronics, taxing consumables, import trading, organization services, exhibitions, and meeting communication services. The company also provides other services like warehousing and freight amenities.
Besides the semiconductor business, the company constructs wooden sea boats referred to as Dragon treasure boats. They have recently amalgamated with Nanjing government to build very comfortable Dragon boats. There are various methods of entry into the market that Dragon can use to market the timbre boats enter the Australian Markets. To have the best method of entry one requires highlighting various entry modes available. These entry methods are total control form of investments, contractual agreements, and joint ventures (International Business: Actions Entry Modes (II)).
Modes of entry advantages and disadvantages
Total Control
One can practice and exercise total control acquisition when there are already existing similar businesses. When a firm has full control it is, free to use firm resources independently. According to Carneiro, Rocha, and Silva 2008, total control is preferable because it has the likelihood of rising and receiving higher returns compared to other entry modes. At the same time a firm can freely introduce new technologies gather and acquire experience freely and exercise their management abilities and talents fully thereby steering the success and goals of the company to coveted levels of high success. It also requires concentration and involvement and therefore Dragon has the chance of implementing their strategic plan effectively.
Full control seems expensive due to high acquisition costs but in essence other means might prove expensive due to some hidden costs for instance the cost of marketing its products and the time it can take to be well known might prove expensive for a newly found company in an entrant area. For Dragon group international there are already other existing similar companies in Australia and therefore the best strategy to practice is acquisition.
According to Oghojafor 2012, this merger formula employed by the banking sector of Nigeria corrected the deficiencies they had in financial sectors in the year 2005, which salvaged the banks from collapsing and it performed well after consolidation. However, these two mergers experienced corporate governance lead to the downfall and poor results eventually. Therefore if strategies and control measures are put in place to correct and enhance good governance the acquisition would be an outstanding example of the ever best successful mergers. Total control disadvantage is that it seems expensive but on the contrary, the acquisitions costs be high but compared to the benefits realized this disadvantage mesmerize. There entry into the Australian market would be easier to if they use the total control entry mode
Joint Venture
A joint venture is whereby all companies intending to acquire a certain company do share in equal measure benefits and responsibilities as well as any loss realized. A joint venture is very good in sharing and distribution of risks and sharing of technologies in equal measure. Easy for the entrant company to abide by the government requirements since the Australian company is already aware of what is required by the government. On the contrary, all the companies lack a holding company support in case capital investments are required. The duration of the agreement is sometimes questionable; the existing technologies transfer mechanism implementation is another hindrance to these jointed companies.
Another disadvantage is that government requirements and regulations are bound to change in case there is need for protectionism of its industries. This can be a big disadvantage to Dragon International limited. In addition, the lack of trust between the two companies over proprietary information may overwhelm the two companies. As a result, a disagreement may lead to poor relationship between the two companies. At the same time, it is questionable when and how the relationship between the two companies can terminate peacefully. Therefore, since at one point in time Dragon International company would like to dissociate from these joint venture it would prove difficult for the other existing joint ventures and therefore not a preference (McDonald, F, Burton, F, Dowling, P, ...