Production of computers of various brands - Essay Example

Brands Computers to be produced will be of various brands to build in the mind of potential customers a strong imaginable competitive advantage in the current world markets. As a result, the customers will think of the product offered by Global Ventures Plc first when they consider product category creating brand equity. Marketability Because of the high quality and affordable price of computers that Global Ventures Plc will produce, it’s highly probable that they would appeal greatly to potential buyers in various markets. As a result more of them will be sold increasing the total revenue of the company and maximizing the profit. Besides the high quality and fair prices, the demand of computer of computer is generally high throughout the world market. This will reduce likelihood of stock becoming obsolete or out of date and also build-up of unsold product due to sudden changes in demand will be avoided. In addition, the market share of the company will tremendously increase to surpass the main competitors within a short time partly because of the quality of services and product offered, air prices and the various markets that the company would target in its sale promotion. The company will target consumer market (people who buy for business and non business use), organizational markets (to supply them computer components for example microprocessors), government markets (Local, state, and federal governments) and institution markets (universities for research, hospitals to run its operation) to broaden its customer base and also increase the sales.  High Profit Margin Because our product will be of high quality and yet sold at fairly lower price than our competitor, the company will sell more than our competitors and therefore the likelihood of making big gains are high. Popular The computers we intend to produce will be of high quality with unique characters than what our competitors have. Based on these qualities, our product would then be at beginning of the product lifecycle. This means they would be more popular hence attracting more sales because they would be like a hot cake in the market. Relevance to lifestyle of customer –the brands to be produced by Global Ventures Plc will be relevant to the lifestyle of various customers .there will be computers specifically designed and with can only be afforded for high class groups, middle class, low class and research purposes. Therefore various demands of the customers will be made thereby ensuring customers satisfaction. Economies of scale Unprocessed raw materials required in the production of computers are cheap and readily available from within the local markets and several foreign countries. In addition, the component parts required, major equipments, accessory equipments are less expensive and are readily available. Furthermore there is available specialized labor and efficient machinery which will reduce marginal costs when the capacity of productivity will increase. Competition Although the company does not have enough to tremendously expand production within a short time, there will be less competition for the products that the company will produce. This is because the computer we intend to develop will have unique characters and quality of which none of our potential competitor has. Therefore because of uniqueness of our product there will be less competition even though the company will not utilize the whole market as it’s expected because the capital it has cannot allow for such quick expansion.  Consumable Computers have a recurring sales value and therefore they will needs to be replaced when they develop functional problems or spare parts have to be bought to replace the parts that have become non-functional. This therefore will establish a long term sales and a customer base with same products. Customers would therefore come back again and again to buy more as they use up what they had already bought from the company. Quality It will be undoubted the computers Global Ventures Plc will be of higher quality. This is because of the uniqueness of the technology that will be used in their design and assembly of components and the usage they will provide to customers. The high quality of the computer which our company will produce will impact a greater customer satisfaction and therefore more and more would come back again and again to purchase our products boosting the sales. In addition, the high quality of our computers will have a positive effect on the reputation and Image of our company and this would even increase the chances of being given big contracts because of the undoubted products and services that our company offers. Diversity Although the company will deals with production and sell of high tech computers, there is also a possibility that it will diversify to offer mutual endeavors, licensing copyrights and brand name rights to overseas companies and setting up subsidiaries in other new countries. Long shelve life. Computers are not perishable commodities and therefore, even when there is no potential buyer of the computers that have been produced by the company, the goods will not be affected and this will minimize loss that may caused by instability of the market as a result of recession. Product and services scope and size of market investigated Product and services The company will deal with the production and sale of computer (desktops, monitors and laptops and computer components) in the initial stage of its operation. But after it has become stable in its operation, the company will also venture in mutual endeavors, licensing copyrights and brand name rights to overseas companies and setting up subsidiaries in other overseas countries. Scope and size of market investigated The market investigated had a population of 100 million potential buyers that can generate revenue of about $ 20.5billion, with 1% population growth rate. The Population structure of this market is such that the Percentage of the young people and aging almost equals but there is a high likelihood that he percentage of aging population will increase in future. High purchasing power because of high income and it also has a High potential for future economic growth. TASK2 INDUSTRY ANALYSIS DOCUMENT – YOU MUST SUBMIT THIS FOR TASK 2 and NOTHING ELSE Don’t feel you need to fill in all aspects. Some aspects will not apply depending on whether you plan to concentrate on production or sales of the product, and depending on the nature of the product/service/industry. You may not be able to find information on some aspects and others may not be important in your industry – so use it flexibly. You should briefly state in the comments boxes (no more than one or two brief sentences) what is important about the characteristics you choose to include. Remember that your Tasks 2 needs to be evidence based - it isn’t enough to just say what seems reasonable – you need clearly and fully referenced sources for your assertions wherever possible. Please observe the Harvard Referencing System conventions (see the document “Quote/Unquote” on the University Learning Skills web page for detailed advice on referencing). STUDENT NAME AND ID: SEMINAR TUTOR NAME: In this box briefly remind the reader what your chosen industry and product/service is from Task 1. Also state whether you are concentrating on production or sales of the product/service: The company of my choice is Global Ventures Plc and I chose to deal with the production and sale of desktops and laptops overseas. This is a global venture which includes exporting products from my country and getting into mutual endeavours, licensing copyrights and brand name rights to overseas companies and setting up subsidiaries in other new countries. Industry/Product Checklist Comments Source of Evidence (Reference) Socio Economic Requirements Economic requirement- industrial and technological development, expenditure patterns and disposable income, distribution channels and economic growth, per capita income and distribution, currency stability, level of acceptance of foreign businesses, Gross National Product (GNP), Social factors - social values, literacy rates, ethics, language, religion, and social organization. -the likelihood of introducing New product or service successfully is high in Wealthy nations. -market in which economic environment provide tiny minority of citizens with the resources to buy their needs may not be good to venture in. -ability of people to read and write influence the development of the economy and marketing strategy planning. -degree of literacy affects information delivered i.e. promotion. -religious based attitudes, beliefs or cultural norms shape marketing choices Potential market size: Large global market. Supplying the products world-wide. GDP $ 20.5billion Variety of profit oriented goods and services provided by the company. Population size/growth 100million people with 1% growth rate. Low birth rate as the population wants to maintain high standards of living. Population structure e.g. ageing Percentage of the young people and aging almost equals but there is a high likelihood that he percentage of aging population will increase in future Low birth rates. Purchasing power (GDP per head) High purchasing power. Because of high income and economies of scale. Future Potential (economic growth) High potential for future economic growth. The market is still underutilised. Growth will be as a result of exploring and utilising the whole market and diversifying the services and product offered by the company And for efficient running of the industry.. Are high literacy rates required? yes Communication with the potential customers Availability of skilled labour important? Yes. -production and sale of desktops and laptops overseas requires skilled labour. -exporting products from the country where they are manufactured and getting into mutual endeavours, licensing copyrights and brand name rights to overseas companies treaty industrialization; and setting up subsidiaries in other new countries requires people with enough managerial, business and economic skills. Or is abundance of cheap labour more important? yes To maximise profit by high total revenue and low marginal cost. Demand/buyer characteristics Does your product sustain or require: A mass market yes Because of the variety of goods and services provided by the industry to suit various customers. A niche market yes Products and services provided by the company target specific market needs, as well as production quality, price range, and the demographics. Affluent buyers yes Large business importers of computers, copyrights and brand name rights buyers. Buyers with modest purchasing power Yes. Variety of products and services provided. Government contracts or big corporate Orders yes Mass production of the company requires big orders or contracts from both the government and other large corporation to justify its operation. Any special distribution requirements e.g.; malls; mass retail outlets yes -Mass retail outlets for easier accessibility of the product to customers. - Proximity of ports to reduce transport costs and for easier export of the product to the market. Are there any particular social or cultural factors which might influence the consumer? yes Response to new services and products from foreign countries, the amount of free time the customers have to purchase the commodity, gender roles in that culture. Are there any potential ethical issues that you need to take account of? yes Contractual procedures especially contracts with the government and other corporate bodies. Is demand for the product sensitive to recession? Does it do well or badly in recession? Yes Demand for the product is highly sensitive and goes down during recession because low purchasing power and diseconomies of scale. Is demand for the product income elastic (do people purchase more of it when there incomes are rising)? Is it a luxury or a necessity or neither? Yes Neither . Higher percentage of consumer's income results in increased elasticity because people will pay more attention when purchasing the good because of its cost. To some (affluent) it’s a luxury while to others (learning institutions and researchers) it’s a necessity. At what stage of the Product Life Cycle is it? New, Growth, Mature, Decline? Growth stage. Accelerated growth in profits and sales. Profits has increased due increase in economies of scale and better prices. Do buyers of the product show high levels of brand loyalty or are they readily able & willing to buy substitute products? Are readily able to buy substitute products. When the price changes and quality of the product is compromised. Does the product have to be produced close to the consumer? No. Because of various channels of distribution which the company has Is after sales service important for the product? Yes. Keeps the customers satisfied, ensures Customer loyalty, Reduces the cost of luring new customers, Helps to beat competitors and Helps to receive feedback. Barriers To Entry: Obstacles Facing New Entrants into the Market Does the product require a high level of financing to get off the ground? Yes. Promotion, advertisements and production cost. Is production of the product labour or Capital intensive? Capital intensive. High cost of production-acquisition of raw material, building of the necessary structures , transport costs Are economies of scale important in the industry? Does the company have to attain a very large size to compete? Yes. No. Reduce marginal cost hence ensuring profit maximisation Company can compete even when its small in size depending on the quality of product and services provided, price friendly to customers. Might existing companies retaliate against a newcomer? Yes. Want to monopolize the market. Do companies in the industry face protectionist policies in the kind of countries they expand into? Yes. Antitrust laws to prevent monopolies. Supply Issues Are there any critical raw materials or other inputs that are necessary for this product? Yes. Supply pipeline of the raw materials. Does the product rely on Just In Time methods of production? Yes. Reduction in stock holding to reduce storage space to minimize both rent and insurance costs. Likelihood of stock becoming obsolete or out of date reduced. Build-up of unsold product due to sudden changes in demand avoided. Can materials/components be sourced from many countries? Yes. Materials required in the manufacture of computers can be found in so many countries-DRC, South Africa, and Chile etc. Do companies in this industry rely on a few big suppliers or many small ones? Who has the greatest bargaining power: companies in the industry or their suppliers? Relies on big supplier. Suppliers. Big suppliers are reliable. Suppliers know the various markets that exist and are in direct conduct with the customer. The Importance of Technology Does the product need high levels of technology for production? Yes. Components, high tech equipments required and skilled manpower. Is it a high tech consumer product? Yes. Knowledge required in usage of the product and the multiple complex function of the product. Does it require high spending on Research & Development? Yes. Research on how the product is used, its components, Design of product and the final product. Does it require highly skilled technical workers? Yes. Technical workers required in components and product design and in the whole manufacturing process. Competitors What type of market structure is the industry? Oligopoly or other? Pure competition. We have various companies with the same product and therefore have to compete for the available markets. Who are the main competitors? Do they operate in global markets? LG corp. and Microsoft corporation They operate in global markets. Their products are found in almost all the available global markets. Are the main competitors Multinational Corporations? How large are they? Yes They are large because of the large number of countries in which they operate, mass production of the product, at present they have a large customer base and have enough capital to expand production. How do companies compete? Price competition Non price competition (brands, advertising, innovation of new products; etc) Cartels Price wars Price competition. Non price competition Fairly low prices to attract more customers. Improved brands of the computer, advertising the products online and other media channels and coming up with new ideas to improve on the quality of the product. Other Important Factors Management of company operations Management board headed by the director. To ensure smooth running and operation of the company. SUMMARY OF ESSENTIAL AND DESIRABLE CHARACTERISTICS Based on your research summarised above, in this box you must now identify the essential and desirable characteristics you will now be looking for when you select a country in Task 3 to launch your product/service idea in. Do this as a series of clearly written but concise bullet statements (not too vague, but not too wordy): ESSENTIAL CHARACTERISTICS The presence of Large market to sell the product is an essential factor that will influence the country to be chosen for this business venture. A country that has a large domestic market for the product intended to be manufactured will be selected as it will offer a ready market thereby boosting more production and expansion of the industry. For this to happen, the chosen country has to have a higher Gross Domestic Product and higher purchasing power with high potential for future economic growth. Availability of skilled labour in the chosen country too will be an added advantage to the company. This is because the products produced by the company are technological based and therefore skilled labour in the fields related to the design of the computer (desktop, laptops and components required) and with managerial skill will be of great use to the general operation and running of the company. A country that provide both the mass market and the niche will be of great value to the company and therefore it will be chosen .Mass market will provide market to the computers and other accessories manufactured in bulk by the company while niche market will provide market to the products and services provided by the company which target specific market needs, as well as production quality, price range, and the demographics. Availability of Government contracts or big corporate Orders will further expand the market for the products and service offered by the company. Mass production of the company requires big orders or contracts from both the government and other large corporation to justify its operation. The presence of Mass retail outlets will ensure easier accessibility of the product to customers hence increase in sale recorded. Special requirements like Proximity of ports will reduce transport costs and also it will ensure easier export of the product to the market through sea routes. The chosen country should have less social or cultural factors which might influence the consumer .For example the Response to new services and products from foreign countries and gender roles that do not affect the purchase and usage of products manufactured by the company. The chosen country has to have Contractual procedures that are long to scare off investors especially contracts with the government. The demand for the product in the country chosen should be less sensitive to recession because low purchasing power and diseconomies of scale. The population of the country chosen has to have a higher percentage of consumer's income to increase elasticity because people will pay more attention when purchasing the good because of its cost. Added to this the country chosen has to have economies of scale for example cheap raw material and labour in order to realize accelerated growth in profits and sales. DESIRABLE CHARACTERISTICS. The desirable characteristic of the chosen country include the following; Presence of Large market to sell the product is an essential factor that will influence the country to be chosen for this business venture. A country that has a large domestic market for the product intended to be manufactured will be selected as it will offer a ready market thereby boosting more production and expansion of the industry. For this to happen, the chosen country has to have a higher Gross Domestic Product and higher purchasing power with high potential for future economic growth. Availability of skilled labour in the chosen country too will be an added advantage to the company. This is because the products produced by the company are technological based and therefore skilled labour in the fields related to the design of the computer (desktop, laptops and components required) and with managerial skill will be of great use to the general operation and running of the company. A country that provide both the mass market and the niche will be of great value to the company and therefore it will be chosen .Mass market will provide market to the computers and other accessories manufactured in bulk by the company while niche market will provide market to the products and services provided by the company which target specific market needs, as well as production quality, price range, and the demographics. Availability of Government contracts or big corporate Orders will further expand the market for the products and service offered by the company. Mass production of the company requires big orders or contracts from both the government and other large corporation to justify its operation. The presence of Mass retail outlets will ensure easier accessibility of the product to customers hence increase in sale recorded. Special requirements like Proximity of ports will reduce transport costs and also it will ensure easier export of the product to the market through sea routes. The chosen country should have less social or cultural factors which might influence the consumer .For example the Response to new services and products from foreign countries and gender roles that do not affect the purchase and usage of products manufactured by the company. The chosen country has to have Contractual procedures that are long to scare off investors especially contracts with the government. The demand for the product in the country chosen should be less sensitive to recession because low purchasing power and diseconomies of scale. The population of the country chosen has to have a higher percentage of consumer's income to increase elasticity because people will pay more attention when purchasing the good because of its cost. Added to this the country chosen has to have economies of scale for example cheap raw material and labour in order to realize accelerated growth in profits and sales. TASK 3 SOUTH KOREA I have therefore settled on South Korea as a country where Global Ventures Plc because it has the characteristics that we required and offers an environment that is conducive for business ventures. South Koreas have a high population of potential customers for product that our company intends to produce. South Korea has a large domestic market and therefore it will offer a ready market to our product of which none of the available competitor has. South Korea has a higher Gross Domestic Product and higher purchasing power with high potential for future economic growth that is vital to the growth and development of our company. The country too has a high number of skilled labor in the area where our company has decided to venture in (production of computers).This is because the products produced by the company are technologically based and therefore skilled labour in the fields related to the design of the computer (desktop, laptops and components required) and with managerial skill will be of great use to the general operation and running of the company. Labor cost in South Korea is fairly cheap and therefore this will have an added advantage to the company as it will reduce the marginal cost hence ensuring profit maximization. South korea is one the country with high consumer population and since the computers that our company is offering are high tech with unique characters and usability and are at the beginning of the product lifecycle, it’s probable that products offered by our company will face a lower competition from two of our main competitors: LG corp. and Microsoft corporation since none of them offers computers with qualities that are similar to ours. South Korea provides both the mass market and the niche will be of great value to the company as it will boost the sales .Mass market south Korea will provide market to the computers and other accessories manufactured in bulk by our company while niche market will provide market to the products and services provided by the company which target specific market needs, as well as production quality, price range, and the demographics. In addition South Korea has a high number of government contracts and big corporate orders. This will further expand our market share for our products and also improve company sales and thereby increasing the profit accrued. Because of well developed infrastructure in South Korea, there is great ease with which our company will develop mass retail outlets and this will ensure easier accessibility to our products by customers hence increase in sale recorded. Proximity of ports (air and sea) in South Korea will reduce transport costs and also it will ensure easier export of the product to the market through the air and sea routes. In addition, the socio-cultural practices in South Korea have a less influence on consumers. Contractual procedures are friendly to attract investors. Since our products are at the beginning of the product lifecycle, their demand in south Korea would be less sensitive to recession because there will be no substitutes with the same qualities and usability. Bibliography Hamilton, L. and Webster, P. (2009), The International Business Environment, Oxford: Oxford University Press. Brooks, I. and Weatherston, J. (2004), The International Business Environment, Hemel Hempstead: Prentice Hall Daniels, J., Radebaugh, L. and Sullivan, D. (2009) International Business (12th ed.), London: FT Prentice Hall. Dicken, P. (2007), Global Shift: Mapping the Changing Contours of the World Economy, (fifth edition), London: Paul Chapman Morrison, J. (2006), The International Business Environment: Global and Local Market Places in a Changing World, Basingstoke: Palgrave Quick A. (ed.) (2007) Encyclopedia of global industries (4th edition), Detroit: Gale Research: Sitkin, A. and Bowen, N. (2010) International Business: Challenges and Choices, Oxford: Oxford University Press Wall, S., Minocha, S., and Rees, B. (2010) International Business (3rd ed.), London: FT Prentice Hall. Read More