Impact of Globalization - Case Study Example

Small Business Management: Impact of Globalization on marketing strategy of Hauri and Section # of > 1. Introduction Competition rather fierce competition is the precise term that defines the business that exists in the world today; especially with phenomena such as globalization coming up and settling into our economy, it is essentially important to re-define the way things are done and thought. This paper is an analytical review of how competition has been increasing over the past few years. 2. Background In Korea during the year 1998, five young programmers met at a local gathering and felt the need for a local computer vaccine i.e. an anti virus. These five experienced programmers initiated Hauri, which literally means under our sky, giving the feel of an umbrella or a protection to its customers. During their initial stages, the economic conditions were not very supportive for a start up, as the economy was going through a recessionary period; thus, they could only manage to start off with $25,000 but within first six months, they were able to launch their first anti-virus program. This was a major success and also due to this, they could get funding from 'Korea Technology Credit Guarantee Fund' for the amount of $33,500 and this had become their seed money. The anti virus market in Korea grew from 4 billion in 1998, to 26 billion in 2002, and the firm grew with it. Of late, the firm has broaden its product line by adding in data recovery with announcement of 'DataMedic Solution'. 3. Problems & Challenges Problems and challenges are a part of routine business activities but analyzing them is the only source that leads to an appropriate solution with long term viability. This section utilizes some tools and techniques for analyzing the problems, so that appropriate solutions can be proposed: 3.1 SWOT Analysis SWOT is one of the widely used tools for analyzing the internal (strengths and weaknesses) and external (opportunities and threats) factors prevailing in the industry under consideration. Thus, SWOT is very helpful in determining the environmental situation, matching the internal and external variables. Following is the SWOT analysis of the firm based on the learning from various sources: 1. Strengths The firm has great potential in terms of the research and development skills The initiators and the owners are five professional programmers Since the owners are directly involved in the work, it gives the firm a cutting edge over the competitors The learning curve is a quicker one since the ownership belongs to professionals rather than the businessmen Most of the anti-viruses developed are primarily windows based, and windows being a widely used operating system is definitely an advantage Financial stability is another important strength for the firm 2. Weaknesses One of the major weaknesses of the firm is its weak brand image; since it lacks professional marketers, it hasn't been able to develop its image as such The firm has a fairly narrow and focused product line, and customers prefer one window solution for all problems The recently done diversification was also unrelated (data recovery solutions) It can be seen that there is lack of vision about where the firm wants to be in the next five or ten years 3. Opportunities The growing market of anti viruses is a big time opportunity for the firm Reduced customer loyalty is also an opportunity because with customers switching all the time, the firm can easily hunt for the share of the pie of other anti virus software makers 4. Threats Reduced customer loyalty is a threat in itself as well as customers are not loyal to any single firm Increasing competition is another major influence particularly with competition coming from foreign products The life cycle of these products has reduced drastically and needs regular updates and newer versions The market is rapidly moving towards maturity which means that firms need to be innovative and proactive in terms of launching the latest versions There is increasing chances and evidences of newer vendors entering into the market As the discussion clearly reveals that the firm has a few strengths, as it now need to capitalize on its strengths to overcome its weakness as these two are the only controllable variables. For the uncontrollable ones, planning is the best tool. 3.2 Five Forces Model Porter's five forces model is considered as an industry practice to understand the market dynamics in terms of the competition prevailing across the industry and within. Following is the five forces model applied to the firm based on the learning from various sources: 1. Bargaining Power of Customer This threat is very much on the higher side. Due to the availability of too many alternatives and reduced customer loyalty, no switching cost; the customers have a higher bargaining power. 2. Bargaining Power of Supplier This threat is inapplicable here to this case 3. Internal Rivalry This threat is very much on the higher side. There is intensive internal rivalry in this business with competition not just coming from within but also coming from the foreign side. 4. Threat of new entrant This threat is very much on the higher side. There are always chances of programmers developing something or the other new every now and then. 5. Threat of substitute This threat is very much on the lower side. Substitution effect is very low because any substitute coming in would eventually be an anti virus in itself. This clearly depicts that the market is highly competitive in nature, as seen, 3 of the 5 variables have a higher score. 3.3 Issue of Pricing When discussing the pricing factor, it is essentially important to realize that pricing is a very important phenomenon to be known with. Considering the market scenario as prevailing, the pricing should be kept in line with the competition, because in competitive scenarios as prevailing in this industry, pricing can cause a major issue in the customer switching and the customer loyalty is readily very low in this industry. 4. Recommendations Following are some of the recommendations for the firm: First up, the firm needs to develop its mission and vision for what it wants to do and where it wants to be. The firm has a weak brand image, and it does take some time to develop the brand image. Establishing an appropriate brand image is important because this is what eventually drives the sales up. The firm needs to develop its mission and vision and assign proper jobs and work with task delegation for the completion of each task. Weak brand image in domestic market is one of the weaknesses Hauri has. However to overcome this obstacle, it will takes long time and effort. Even though Hauri can have relatively sustainable profit from ViRobot, for small business basically need to find lucrative source fast. So, Hauri have to use its preexisting strengths such as high technology performance(Engine) and its small size(Flexibility). In this context, recommendations for Hauri can be divided into two parts; domestic and the global. In domestic market, Hauri should use strategy to maintain 2nd rank in the industry. With their proved engine, they should concentrate on antivirus software. While major competitor, Ahnlab, is trying diversification toward total security solution company, through strategic alliance with INKA which is internet payment company Hauri can expand their business in cheaper way than M&A(Product). And Hauri need to focus on building credibility with large customers such as government and companies(Place). At the same time, because this industry is service-oriented, Hauri have to develop the system to gather customers' feedback and reflect them as soon as possible. And for the price, to react increasing competition, rather than lower their price, they have to service to scan virus freely but pay for that saperately(Price). In this process, CRM will be contained with using public media(promotion). The reasons of these 4p are following. As mentioned above, first of all, it is hard to catch-up Ahnlab which has 70% market share. And second, because Hauri is small business, radical attempts to market share increasing will be cause lack of capital. And for another reason, to change Korean customer's need, many time and effort will be needed, so other effective way should be concerned. Surely, over-competition should be avoid, too. So Hauri need to do what they do well in the way they do well. At the same time, Hauri should expand their market in the longer perspective. In here, two characteristics define their position. Having no power to change the whole market and low entry barrier. It is time for them to act proactively and increase profit with technology advance and market information. And it is needed to lessen domestic competitive pressures and declining domestic demand(market mature graph). Global niche marketing strategy need specialization of product, technology, and market segmentation. So from the experience of developing windows antivirus software, they should look at the other possibility in foreign niche market. It is developing antivirus software targeting India.(Product & Place) Although the numbers of linux user is rapidly increasing with its open source merit1, and although its increasing numbers of virus after first McAfee found Bliss2, antivirus software developing is relatively slow. Eastern European countries have many linux user but they are under influence of Kaspersky which is Russian company3. Arabian countries also have many users but lack of infrastructure. However, India has good infrastructure and accessibility to upper linux user ranker countries is good.4Chinese government's IT market-friendly policy is important, too. Initially, through liason, market researching and promoting should be done at the same time. Building relationship with local government is necessary and using e-mail promotion could be concerned. 6. Conclusion It is critical to analyze the businesses and industries prevailing in the world today, and an important aspect is analyzing what is lacking in them. This case clearly reveals that the firm is lacking direction of where it is and where it wants to be. This case is a classical example of lacking a vision for a firm. However, the firm seems very much capable of covering up its mistakes, and with a professional team heading, they surely can increase their market share in the industry if they realize their mistakes at the right time. Read More