EMC Corporation International Business - Case Study Example

International Business Affiliation Table of Contents Executive Summary 3 An insight into EMC 3 Scope of work 4 Product Profile 4 General External Environment Analysis for Oman and Cyprus 5 Oman 5 Oman PESTEL Analysis 6 Political Analysis 6 Economic Analysis 7 Social Analysis 8 Technological Analysis 8 Cyprus PESTEL Analysis 9 PESTEL Analysis 9 Political Analysis 9 Economic Analysis 10 Technological Analysis 10 Social Analysis 11 Market/ Sector Analysis 11 Competitor Analysis (Porters five forces) 13 SWOT Analysis 13 SWOT Analysis Oman 14 SWOT Analysis Cyprus 15 Investment Feasibility 16 Mode of market entry (Oman) 16 Cultural obstacles 17 References 18 Executive Summary EMC Corporation is a top Information Technology storage hardware solutions provider. The solutions provided by EMC promote data recovery and data backup. EMC also offers cloud computing solutions. EMC Corporations is planning to expand its operations in the Middle East, and is considering Oman and Cyprus countries. Below is an external analysis of EMC in the two countries, looking into market and competitor analysis as well as SWOT analysis. The recommendation is that EMC should invest in Oman for there, the political and economic risks are less. An insight into EMC EMC Corporation (EMC²) is an American firm headquartered at Hopkinton, Massachusetts. The corporation founded in the year1979 by Richard Egan and Roger Marino (Hoovers, 2012). The company introduced its memory boards for the Prime Computer in beyond memory to other forms of computer data storage types as well as networked storage platforms. The company began shipping its chief product, which was known as Symmetrix, in 1990 (EMC, 2000). This product can be attributed to propelling the company’s rapid growth in terms of size and value in the 1990s. Its value rapidly increased and transformed the corporation from a million dollar to a billion dollar multinational (EMC, 2000). The company has over the years transformed from high-end storage platforms to a portfolio of software, and services that give organizations the capabilities to deliver IT as a service via cloud computing. The company’s revenue grew to $21.7 billion in revenues in the year 2012 (MarketWatch). The company’s CEO Joe Tucci is credited with this transformation in the year 2001 (MarketWatch). The corporation has also been taking part in joint ventures, such as the VCE joint venture with Cisco, with investments from VMware and Intel that was aimed at creating services and products for the converged infrastructure and cloud computing markets (Steven, 2011). Scope of work EMC is interested in conducting a feasibility study on the potential investment opportunities for its current Information technology products in two Middle Eastern countries i.e. Oman and Cyprus. The emerging business technology has intensified the competition among businesses at global as well as national levels. The two countries present quite a great opportunity for EMC to introduce and have its products widely used in various organizations in either of the two countries. Product Profile The products and services offered by EMC Corporation are designed to enable IT departments in organizations to transfer to a cloud computing model and effectively analyze the big data in organizations. The company is helping enterprises build Web-based computing systems with its data/ information storage products and services. The company’s hardware and software platforms give enterprises capabilities to store, protect, manage, and analyze immense data volumes. The company also offers data security and compliance products through its RSA Security business. It also offers virtualization software through the majority-owned and famous VMware as well as VPLEX. In addition to these, the company provides consultancy services, Education services, Customer support services, technology services and solutions. The Company IT products can be categorized into: 1. Information Storage (products include VNX Family and Atmos). 2. Storage and Content Management. 3. Virtualization (VMware, VPLEX). 4. Services (E.g. consulting). 5. Cloud and data computing. 6. Archiving, Backup and Recovery General External Environment Analysis for Oman and Cyprus Oman Oman is an Arab country that is located strategically at the mouth of the Persian Gulf. Oman borders Saudi Arabia to the Western side, UAE to the North West, and shares marine borders with Pakistan and Iran. The country covers an area totaling 309,501 km2. The country’s population as at January 2015 was approximately 3 519 120 persons, which was an increase of 2.02 % (69 746 people) in comparison to the population of 3 449 374 the year 2014 (Countrymeters, 2015). The Country’ Capital is Muscat. In Oman, the official language is Arabic. English is also common in most of the areas of the country. Swahili language is also spoken due to the history that is shared between Zanzibar and Oman. Source: https://www.google.com/maps/place/Oman/@21.5278654,55.9196996,5z/data=!3m1!4b1!4m2!3m1!1s0x3dd69f66a9d59bbf:0x3a064c7665b1a817. Accessed on June 10, 2015 Oman PESTEL Analysis Oman’s economy is regarded as one of the Middle East’s high-income economies. The economy of the entire globe continues to grow irrespective of uncertainties that are being experienced in Europe and the United States markets. Oman is well ahead of some of the prominent economies of the globe in terms of global average growth rate and economic growth as well. This can be attributed to the strong economic policies that are existent in the country (Oman). Oman is a Country Risk Tier (CRT-3) country with reasonable levels of economic, political and financial system risk (AMB, 2014) PEST analysis of examines factors that affect an industry and influence a company’s operational in that industry sector. Political factors comprise government policies that relate to an industry, trade restrictions and tariffs tax policies, laws and regulations, etc. The economic factors generally relate to alterations in the economy such as economic growth, exchange rates, interest rates, etc. Social factors frequently look at the cultural features and consist of health consciousness, age distribution, population growth rate, as well as buying patterns, etc. The technological factors relate to the application of new innovations and ideas (Gillespie, 2007). Political Analysis Oman is a monarchy and is ruled by a Sultan, The Sultanate is neither a governing body nor political parties. The sultan is also the finance minister, prime minister, defense minister, foreign affairs minister as well as the chair of the central bank. The Oman government is quite keen in supporting direct foreign investment into the country. The Oman Authorities, in the year 1997, created the Omani Centre for Investment Promotion and Export Development (OCIPED) for the purposes of providing foreign investors and venture capitalists with a one-stop-shop for registration and licensing procedures (Yochanan, 2009). Judicial transformations have taken place over time in Oman, and the court system is considered to be largely fair (Carmen, 2009). The levels of corruption are quite low and in any case do not act as a significant inhibition to foreign investment. The government offers incentives to promote local and foreign investment through various ways such as tax exemptions, preference for investors in the government land allocation process, the issuance of plots for industrial activity in industrial zones for little charges, organizes faster issuance of permits and immigration visas for workers from foreign nations, reduced water, fuel and electricity charges, subsidized or interest-free loans with repayment terms spread over a long period (Moriset & pirnia, 2000) and financial help for the development of technical and economic possibility studies (Yochanan, 2009). Economic Analysis The Oman economy continues to grow over the years. The immense growth has been driven by strong oil prices, the growing demand for services as well as large on-going capital projects. Oil and natural gas revenue is the main driver of the economy, since it is the most vital source of government revenue export earnings. Dwindling oil reserves are, however, pressuring the government to diversify the economy and generate private sector jobs for the population is on the rise (Al-Badi, Malik, & Gastli, 2009). The Oman Vision 2020 development plan stresses that the Omani economy needs to enlarge its economy through a process of privatization and industrialization. The core single industrial investment target is Sohar which is a port city (Tyler, 2011). The government is working on developing several main privatization programs, comprising power generation projects. It is expected that Oman will triple the industrys one percent contribution to GDP. The government’s port at Duqm has called for the construction of an oil refinery, fish processing center and an airport. The Omani’s have been observed to have a constant trend in savings, investments, as well as consumptions. Social Analysis Virtually all Omanis are Muslim, and a great percentage of them adhere to Ibadhism, which is a different kind of Islam. One of the major doctrines of Ibadhism is the acceptance and tolerance of others, results in a warm, open culture that is tremendously welcoming and friendly to foreign visitors. Close to hale of the entire Oman population live in the city of Muscat. The government has over the years been investing in education for the population (Countrymeters, 2015). Technological Analysis Technological advancements in Oman have been immense. The country prides of modern transportation networks and an excellent modern transportation network including airports, ports and road network. Businesses and the governments have continued to adopt technology in various forms of activities. It is estimated that by the end of a forecast period to 2018, the public and private sectors will present a high demand for smart systems and cloud computing. This will help develop the IT services market. Although cloud computing is a relatively small niche of the Omani Information Technology market, it actually possesses a high growth potential. The telecommunication network is also excellent (Al Majeen & Pam, n.d). In Muscat is the Higher College of Technology. This is Oman’s second largest education institution for higher learning (Al Majeen & Pam, n.d) that caters for close to 7300 students studying in various technology-related programs. Other technology institutions are also available. This is an assurance of the availability of manpower. Cyprus PESTEL Analysis Cyprus is 240 km long and 100 km (62 mi) wide. The population as at 2013 stood at 1.141 million (bank, 2013). The official languages in Cyprus are Greek and Turkish. Other languages spoken include English, Armenian and Russian (Agency, 2015). Source: https://www.google.com/maps/@34.8458021,35.985819,5z. Accessed on June 10, 2015 PESTEL Analysis Political Analysis Cyprus is characterized by a certain level of political stability. The island is divided in half after the invasion by Turks in the year 1974. There is still Turkish military presence in the occupied part of the country which accounts for a certain level of danger (Tsiakkiros & Pashiardis, 2002). In spite of its own political stability, Cyprus is geographically positioned quite close to Egypt, Israel and Lebanon. This neighborhood is a very unstable region, often putting Cyprus in a compromised position as well. The country joined the European Union (EU) along with other countries in the year 2004. As a result, ever since, trade with other countries within the European Union has been quite easier. Economic Analysis Cyprus has currently been affected intensively by the global economic crisis, attributed to the economic situation in Greece. The country has an immediate association with Greece. Two of the major banks in Cyprus are among the chief holders of Greek bonds in Europe and the first country Cyprus imports from and exports to Greece (Agency, 2015). The CIA Factbook states that as per estimations in 2011, a percentage totaling10.2% of the countrys exports and percent of the countrys imports are in conjunction with the U.K. This makes the United Kingdom the second largest export partner and the third largest import partner for Cyprus. Technological Analysis There has been a widespread use of the internet in Cyprus. There is also a wide acceptance of research and development. The Cyprus government has acknowledged ICT as being among the sectors experiencing a high growth rate. In response to this, the government has developed a Digital Strategy and Action Plan which it is focused on implementing. Additionally, the government is keen on establishing or advocating for the establishment and development of a new large scale Science Technology Park (STP). The project will be hosting research centers, spin-off innovative enterprises business incubators, in addition to both international and local based companies. Cyprus also has quite a high number of ICT professionals who have graduated from the university. These graduates possess international expertise and experience in several technology related industry sectors (Agency, 2015). The telecom sector has immediate access to the latest developments in IT. Social Analysis In Cyprus, the Turkish Cypriots adhere to Islam religion while Greek Cypriot belongs to the orthodox church of Cyprus. 98.2 percent of the Cyprus population is Christians. The population growth rate stands at 1.4 percent (Agency, 2015). Market/ Sector Analysis EMC targets large companies as well as small and medium-sized businesses across different vertical markets. Nearly half of its early half its total sales originate outside the United States. (Hoovers, 2012). The solutions that are offered by EMC cut across all industries, including the financial industry, telecommunication industry, among others and even the government. Private users are also a target area. EMC’s top customers consist of the world’s largest financial institutions, airlines, manufacturers, telecommunications providers, retailers, as well as universities and governments. These clients rely on the advanced storage solutions provided by EMC for such applications as customer billing, transaction processing, corporate intranets and the Internet, data warehousing, data mining, and business continuance. The technological initiatives by the governments are a sign of the great demand for cloud computing services. The other industries will also require to effectively analyzing their big data in response to the competition that is ongoing in the global business environment. Looking at Oman, there are a number of multinational industries that will obviously need the services from EMC. The growing telecommunication industry will have so much data that it will be so hard to maintain it without the use of cloud services. Considering that there are other IT services giants in the market such as IBM, EMC will need to offer excellent services so as to gain a competitive edge over others. Timely, qualitya dn affordable services are what customers go for. For EAC to acquire a great segment of the market then they will require to provide exclusive services. The demand for technological services has been growing all over the globe. To remain relevant and competitive, businesses have been forces to adopt technology in different dimensions. Various companies such Toyota, McDonalds, Microsoft and Apple have a global presence, including Oman and Cyprus can be felt around the globe. Their fierce competition has been driven by technology. Thus, they have managed to establish locations in a lot of nations worldwide. Through these locations, they are able to create and disseminate products/ ideas to their partners, customers and employee globally (Benjamin, 2007).  Competitor Analysis (Porters five forces) EMC Corporation faces competition from some of the top technology giants such as Apple Inc., HP, Dell Inc., NetApp Inc. and Western Digital Corporation. Based on the Porters five forces, EMC faces corporation faces competition from existing players, new entrants in the market, customer’s bargaining power, substitute products and the bargaining power of suppliers. EMC Corporation faces high competitive rivalry. The emerging new technology and the fight from companies to gain a part of the market share has been a great challenge. The technology industry is also growing at a very high rate. In addition, the global economy has been quite slow, and exit barriers from the industry have been quite high. The cost of raw materials has also been quite high. Customers in the technology industry exhibit a high level of loyalty too (Kaplan, 2008). The threat of new entrants is medium. The barriers to new entry into the industry are quite high. In addition, the brand identification and product differentiation in the industry is quite high. EMC Corporation controls channel of distribution. The supplier power in the technology industry can be rated as middle to high. There is a large number of suppliers as well as a large size of these suppliers. Diversification of products among suppliers is quite low. The switching of costs and buyers is also quite low. Buyer power can also be rated mid to high. The concentration of buyers is quite high. These buyers are informed as well. Switching costs for buyers are quite high. The threat from substitute products is quite high (Al Majeen & Pam, n.d). SWOT Analysis Below is an analysis of the Strengths, Weaknesses, Threats and Opportunities of EMC Corporation in both Oman and Cyprus. SWOT Analysis Oman Factor Location Type of Factor Favorable Unfavorable Internal Strengths - Largest standalone storage vendor -Focus on Research and Development -Market leadership -Inorganic growth -Has subsidiaries such as Iomega, RSA Security, and VMware -Good customer relations Weaknesses -Dependence on the US -High long term debt External Opportunities -Political stability -Thriving economy -Increasing virtualization -growth in digital information -Positive outlook for cloud computing -Low bureaucracy -Low taxation rates -Cheap and readily available energy -Welcoming environment -Human power availability Threats -Economic slowdown -Unstable weather -Intense competition SWOT Analysis Cyprus Factor Location Type of Factor Favorable Unfavorable Internal Strengths - Largest standalone storage vendor -Focus on Research and Development -Market leadership -Inorganic growth -Has subsidiaries such as Iomega, RSA Security, and VMware -Good customer relations Weaknesses -Dependence on the US -High long term debt External Opportunities -Increasing virtualization -growth in digital information -Human power availability -Government projects Threats -Political instability -Economic slowdown -Unstable weather -Intense competition Investment Feasibility Considering the two instances of SWOT analysis, for both Oman and Cyprus, Oman seems to be the best option for EMS Corporation to invest. The country is more stable political wise compared to Cyprus. In addition, the government’s support and incentives are more attractive to foreign investors. Oman also has a strategic location. The political and economic risk in Cyprus in Cyprus is quite high. It would therefore be of great benefit if EMC invests in Oman country. Mode of market entry (Oman) The method that EMC Corporation would use in entering the Oman market would be a Foreign Direct Investment. This mode involves the transfer of resources such as capital, technology, and personnel. They may also choose to acquire an existing enterprise in the country or come up with a new establishment (Morah, 2012). Foreign Direct Investment would be quite suitable as the Omani government offers great incentives for direct investments. The company can also acquire labor from the graduates in the technology schools in the country. Cultural obstacles The Oman society is guided by strict principles and doctrines of their religion. People relate quite well to each other. This presents a suitable investment place. In addition, gender discrimination in work environments is absent and work goes on well without minding ones gender (Barth, 1983). References Agency, C. I. (2015). Information and Communication Technologies (ICT). Retrieved June 2015, from http://www.cipa.org.cy/easyconsole.cfm/id/181 Al Majeen, i. M., & Pam, M. (n.d.). Evaluation Approach of Information Technology Adoption for Business. Transformation in Oman. Al-Badi, Malik, A., & Gastli, A. (2009). Assessment of renewable energy resources potential in Oman and identification of barrier to their significant utilization. Renewable and Sustainable Energy Reviews, 2734-2739. AMB. (2014, August 18). AMB Country Risk Report. bank, W. (2013). Retrieved 2015, from http://data.worldbank.org/indicator/SP.POP.TOTL Barth, F. (1983). Sohar, culture and society in an Omani town. ohns Hopkins Univ Pr. Benjamin, L. (2007). The age of globalization: Impact of information technology on global business strategies. Honors Projects in Computer Information Systems. Carmen, A. (2009). Measuring governance and corruption through the worldwide governance indicators: Critiques, responses, and ongoing scholarly discussion. PS: Political Science & Politics, 139-143. Countrymeters. (2015). Oman population. Retrieved June 2015, from http://countrymeters.info/en/Oman Gillespie. (2007). PESTEL analysis of the macro-environment. Foundations of Economics,. Hoovers. (2012). EMC Corporation Company Information. Retrieved June 9, 2015, from Hoovers: http://www.hoovers.com/company-information/cs/company-profile.EMC_Corporation.f1df1fcbf5224df8.html Kaplan, R. S., Norton, D. P., & Barrows, E. A. (2008). Developing the strategy: Vision, value gaps, and analysis. Balanced scorecard report, 10(1), 1-16. MarketWatch. (n.d.). EMC corp. Retrieved June 2015, from MarketWatch: http://www.marketwatch.com/investing/stock/emc/financials Moran, T. H. (2012). Foreign Direct Investment. John Wiley & Sons, Ltd. Moriset, J., & pirnia, N. (2000). How tax policy and incentives affect foreign direct investment: a review (vol. 2509). World Bank Publications. Oman. (n.d.). Retrieved June 2015, from Research and markets: http://www.researchandmarkets.com/reports/2713799/pestle_analysis_of_oman_2013 Steven, B. (2011, June 4). Cisco Partner Summit Features VCE effort. Retrieved June 2015, from CRN: http://www.crn.com/ Tsiakkiros, A., & Pashiardis, P. (2002). Strategic planning and education: the case of Cyprus. International Journal of Educational Management, 16(1), 6-17 Tyler, M. (2011). Made in Oman: Promoting Manufacturing and Export in the Sultanate of Oman. EMC. (2000, July 19). Press Release. Retrieved June 9, 2015, from EMC: http://www.emc.com/about/news/press/us/earnings/20000719-469.htm Yochanan, S. (2009). 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