Intense Competition among Business Organizations - Coursework Example

?Marketing strategies Table of Contents Executive summary 4 Introduction 4 SWOT analysis 6 Assess the suitability of the firm’s services for foreign market 9 Success at domestic market 9 Product or service uniqueness 10 Particular need in the specific market 10 Emergency need of product or services 10 Screening Regions to Identify Target Markets 11 Assess Industry Market 13 Select foreign business partner 15 Estimate firm sales potential 17 Conclusion and recommendation 19 References 21 Executive summary Murgitroyd and Company is a European Patent and Trade Mark Attorney service provider headquarters in Glasgow and business offices at various parts of the world. The company wants to expand their businesses at China and increase its market share in the next 24 months. The company specialises in the field of prosecuting, licensing, trademarks and copyrights have a great potential at China as the growing grey market in the region are directly affecting the business for many in the country. In order to find the strategies and evaluate the factors which will help Murgitroyd to grab the market share at China and expand their business in the next 24 months the company’s strength, weakness, opportunities and threats are evaluated which will help the company to implement their strategies successfully. The global market opportunities are assessed by finding the sales potential in the market. The foreign market sustainability of the products is also needed to be done to find whether the product is suitable for the target market or not. Screening the potential market is the next step the company should follow investment. Then the key business partners and the distributors’ availability are researched who are the main drivers of the business. Understanding the customer behaviour is also an important factor which will help the company to estimate the sales forecast of Murgitroyd. All these steps should be carried out very carefully by the company for a successful implementation of the strategies for a sustainable growth in the market share in the next 24 months. Introduction The present age of business environment is characterised by intense competition among the business organizations. This has led to firms adopting strategies to differentiate their products and services from the offerings of their competitors in the market. Companies are essentially spending huge amounts of resources towards research and development to create unique products. Firms are also trying to protect their intellectual property rights so as to prevent their competitors from infringing and illegally using their research. This has also augured numerous opportunities for organizations that provide patent and copyright protection to the firms. The present study would analyse the business strategies of a Murgitroyd and Company with regards to its business strategies in China so as to improve its market share in the nation in the coming 24 months (Miele, 2000, p.1). Murgitroyd and Company is a UK based patent and copyright consultancy firm that provides legal and consultancy services to business organizations for protecting their intellectual property rights. The company provides services to its clients based across UK, Finland, France, Germany, Spain, Ireland, Italy, Japan and the United States of America. The company has over the years grown as a mature organization with a dedicated workforce and is presently considered to be one of the leading consultancy firm of its kind in the European market (Murgitroyd & Company-a, 2011). The Chinese market provides opportunities to the organization considering the large number of manufacturing organizations present in the nation. The technological advancement at China with growing demand for the enterprise IP services gives a great potential for the company to explore their business in this part of the world. However there are certain challenges in the nation that mainly arise due to certain legal aspects. (The Economist, 2005, p.1-9). Moreover with the government largely favouring domestic players and considering the fact that most of the decision making bodies of the foreign manufacturing organizations being located outside China makes it very complicated for copyright protection. Firms are increasingly taking this as a negative aspect while investing in China and are taking it as an additional cost (The Economist, 2005, p.1-9). This provides good room for organizations like Murgitroyd to establish a strategic presence and fill the loopholes with a quality service (The Economist, 2005, p.1-9). SWOT analysis SWOT analysis is performed in order to perform the internal and external analysis of the firm to find the strength, weakness, opportunities and threats which a firm can face in the long run or from a particular region (Bohm, 2009, p. 2). SWOT analysis gives a comprehensive analysis of the market for the company to understand its benefits and advantages from others in the market and to find the future opportunities and find risk involved in it. Strength Strength of the firm is mainly the internal factors that a company possesses and has an extra edge above others in the competitive environment. These internal factors can be the employees, the management team, previous experience, knowledge of the market and various others (United States Department of Agriculture, 2008, p. 2). The main strength of Murgitroyd is the growth and development of the company with its vast network worldwide and its ongoing plan for farther expansion in different countries. In the year end 2010, the company even expanded its business to Japan and Tokyo by replicating its business development plan as in UK. The companies highly selective acquisition criteria facilitates the company to reach to a wider market with a solid base and produce product at a competitive price than the existing players in the market for the same business processes. Another aspect of the company which act as the strength is its employee base. The young age group compared to the industry gives a great advantage for the firm to retain its employees in long term and the qualified manpower in the top management gives a better understanding of the business analysis for the company (Murgitroyd Group plc, 2010, p. 9). Weakness Weakness can also be considered as the internal factor which is needed to be evaluated to understand the possible faults which might cause damage to the business. Thus evaluation is a very important task for the company so that it can recognize its faults and can act accordingly for the improvements to cope with the different problems which may arise (Pahl, Richter, 2009, p. 7). Though Murgitroyd is a popular brand at Europe but at new regions like China it will take time to occupy the market. This can be an advantage for the competitors above Murgitroyd who already have an established business at the new business areas. The company’s workforce though highly qualified but the total workforce of 221 as on May 2010 was not enough for more business expansion worldwide. The company need to train more employees for a faster growth in the industry and the recruitment should also be done accordingly with proper selection of staff’s from the country of expansion. The company also don’t have knowledge of the new market so the company need to evaluate the new market and understand the economic and market demand of the product for the company’s offerings. The financial condition of the company is also need to be evaluated for the expansion plan. For the expansion into China, Murgitroyd need to invest a lot for the different business operations and the marketing activities which are required for the expansion plan. This is a weakness for the firm as it’s very risky for the company to invest in a completely unknown market. This investment can result to huge loss for Murgitroyd and can affect its present business practices also at Europe. Opportunities Opportunities are the capabilities of the firm to take the advantage of the market trend and grow accordingly. These are basically the external strength of the company which gives them an extra edge in the competitive market. The various external analyses which are evaluated by the companies during the opportunity evaluations are economical, political, technological and environmental. These market opportunities for any company can come from many sources and the firm need to identify these opportunities and implement its strategies with proper research and evaluation process to minimize the threats from the environment (Ferrell, Hartline, 2008, p. 127). Murgitroyd can take the advantage of the growing economy of China to expand its business and reach a wide range of customers with the technological advancement in the country. The strong base at Europe gave the company immense experience to use technologies and can very well implement them into the new market with the new technologies and resources. The growing economy is also a strong weapon for the company to expand in a faster pace along with the governmental support for the development of new industries at China. The industrial growth at China is a great prospect for Murgitroyd to take the advantage to enter the market. The rising share price of the company from 225p and 302.5p during recent years also gives the company shareholders the opportunity to invest into the company which gives will act as an opportunity to expand smoothly internationally for the firm (Murgitroyd Group plc, 2010, p. 10). Threat Threats are the probable hindrance that a company might face in order to enter into a new market from the existing players or due to increasing competition in the market (Evans, Campbell, Stonehouse, 2003, p. 199). There are many other threats that can arise against the company like pressure from the suppliers and the customers which can be very difficult for the firm to deal at certain circumstances. The economical downturn at the selected country can also affect the business and the company may face huge loss in the investment process. Murgitroyd Group needs to evaluate all these aspects and understand its strength and weaknesses. The strength will help the company to identify the market scenario and implement the way in which the company has an advantage over the competitors and this will give an extra edge for the company. The company can grow at a faster rate by identifying the core growth prospect in the market which is suitable to their way of business and finding the weaknesses will help the company to improve in their areas which are needed to be developed to grab the market. Assess the suitability of the firm’s services for foreign market After the assessment of the strength and weaknesses of the firm the next step carried out by the company before entering into the market is the suitability of the company’s product and services for the foreign market (Cavusgil, Knight, Riesenberger-b, 2010, p. 7). There are various factors which are evaluated by the company to understand the suitability of the products. These criteria’s can be as follows- Success at domestic market When the product or services are successful in the country of origin then there is a good chance for the company to succeed in the foreign market with similar demands. The management should identify the identical market with similar taste and demands as the home country and then explore to be successful in the foreign market. Murgitroyd being an a successful brand at Europe have a great advantage to expand its business to foreign countries as it will take less time than any new firm expanding its business along with brand name. Product or service uniqueness The growing needs of the market for different types of products are growing day by day. But this is resulting in the growth of products which are common in most countries. Thus uniqueness is very important for the companies to innovate products which will be in demand universally. Though finding the unique product or service is very difficult but relative uniqueness and adding important features to the product which are difficult to duplicate can lead to promising sales at foreign countries. This can be an area Murgitroyd may face strong challenges at China as counterfeit and pirated goods are heavily practiced at these parts of Asia. The company need to be very careful about the legal system and protect its properties from the different flawed approach in the narrow legal term of China. Particular need in the specific market Identifying the need for particular product or services and recognizing the demand of new product and services in an emerging area can help a company to acquire the market. Murgitroyd offering a trade mark and patent service can have a good prospect at China where there is heavy practice of piracy and forged goods. The need for protection of intellectual property from the industry and copyright of services and products are vital issues at China which can give an upper-hand for Murgitroyd to flourish in the market. Emergency need of product or services Though at long term this is not a part company should concentrate. Expanding internationally can sometimes occur due to the emergency in services like disaster or other emergent trend. The growing trend of copyright product over the world can be good prospect for Murgitroyd to promote their service and make people aware of protecting intellectual properties. This can give rise to the emerging trend of the product in the new market. The managers of Murgitroyd need to evaluate several aspects for a firm entry into the foreign market. The people who will purchase the product and use, need for the product in the particular market, exact region for the product offering, factors affecting sales, all these are needed to be evaluated and understood before launching the service or product at China (Lawrence, 1997, p. 44). Screening Regions to Identify Target Markets International expansion of business need to screen the market and the regions at different parts of the world for the different aspects like the import, export facilities, duties and taxes involved in the processes and the investment for the expansion. Foreign suppliers are needed to be found for easy logistics and cost cutting on the products. After choosing the country the company should evaluate the conditions for importing into the country and the relative risk from different areas like political and governmental laws. The trade barriers of the specific country also play an important role in the selection process. These researches can be done from the trade statistics done till date in the specific country selected for operation. This will give an idea for the company to understand the trend in the target market and its trade barriers. Choosing the right market is very essential as it not only incurs huge loss for the company is wrong selection is done but also the firm ties up its various resources in the business in the specific region which can turn out to be very profitable if they are invested elsewhere. Foreign direct investment with the establishment of physical presence through mergers and acquisitions on different departments like technology, resources, capital need a very critical evaluation of the market as it will be very costly for the company if wrong interpretation was done in selecting the target market. The gateway country is the first which are targeted by any company before entering into a specific region. For entering into the China, Hong Kong is the gateway followed by most of the countries to understand the people and the business pattern of the region (U.S Department of State, 2011). The relative market will give an idea for Murgitroyd to understand China better and then implement the strategies accordingly to get a strong hold in the market. Companies mainly follow two techniques for the selection process of the target country. The first one is the Gradual elimination process from the available data from various researches conducted and the second process of research is by assigning ranks to them according to their market sizes, growth, intensity and the consumption capacity of the particular market. Market growth rate is an important factor to be analysed by Murgitroyd to find the potential of the new product into China and its advantages over the other countries. Other factors like foreign direct investment into the market for long term growth prospect, taxes of the different countries with trade barrier laws should be looked after by Murgitroyd for the financial barriers which they might face in the business operations. China having a high trade barrier for protecting the domestic market can a challenge faced by the company to enter into the market but recent reforms of Chinese Government policies for reducing the trade barriers for US companies can open the gateway for other countries also in recent years (Npr, 2011). On the other hand the region is highly industrialized it can be a great prospect in the long run for the firm if it can take the advantage of market attractiveness for the product and win over the competition in the market. Various cross cultural agencies like Scottish enterprise help firms to enter into China and establish business. This will facilitate the process of establishment of business for Murgitroyd into China. Assess Industry Market Market screening is a vital activity of the manager to identify and launch its product or service according to the potential in the market. The potential countries are screened first and managed to sort around five to six and then the most promising market are evaluated at macro level through several researches in respect of workforce availability, financial structure of the country and the business environment available. One of the major departments Murgitroyd & Co. should look after in the market is the availability of the distributors in the region (Machigan State University, n.d., p. 36). Industry potential is related to the sales potential of the firm which the firm can achieve in the next two years. Sales forecast are done keeping in mind the industry market potential. For the evaluation process the manager need the market size, growth rate, traffic non traffic trade barrier, customer requirement data for a successful implementation of the strategies for the forecast process in the next 24 months (Cavusgil, Knight & Riesenberger-a. n.d., p. 13). Need of the market is also required to be evaluated by the manager to find the fastest growing market. Figure 1: A.T. Kearney Foreign Direct Investment Confidence Index (Source: Tamer, 2009, p. 341) China being technologically highly advanced has a great demand for electronic and IT products producing a huge potential for Murgitroyd to expand their business at China. Beijing being the capital of China directly under the Central Government and with a huge population of 7.61 million and Shanghai, the largest city of China with a population of 9.86 million are the centre of industrial development at (China Through a Lens, n.d.). Thus these two are the major cities which Murgitroyd should concentrate on expansion of their business as it will be very convenient for the firm to avail different resources like workforce, technology etc.. The increasing products in the grey market at China need the companies to involve anti-forgery system to protect their goods in the global market and this level of grey market activity also influence the pricing and distributors’ activities which are needed to be controlled. This gives a great potential for Murgitroyd to grab the market to promote their services of Trademarks, Copyright and global IP services for portfolio management. But on the other hand the company itself required being careful about their business process as entering into China is not easy for any foreign investors due to the legal system and the administrative processes at China. Other important aspects the company should evaluate are the competitors in the market. Beijing Huizechengxin IP Agency co. ltd. and Beijing Zhonghai Wisdom Intellectual Property Agency Co ltd. are few players already existing in the market located primarily at Beijing and other parts of China like Guangzhou, Wuhan and Dongguan. These firms are mainly dealing with the patent, trademark services and IP services. China generated about 3,108 patents in the year 2009 which was ranked fourth in Asia-Pacific regions with a rapid rise of 1 percent within four years from 2005 to 2009 (Viboonchart, 2011, p. 1). This growing business gives a great potential for the company to expand their business taking the advantage of the market. But Chinese companies are very good at counterfeiting services and goods and soon the innovative products can be stolen or copied and sold at a cheap rate in the market (Thomson, 2009, p. 10). Also the government pricing and trade policies for protecting domestic industry with effective regulation on the IPRs can be challenging for Murgitroyd for entering the market (Maskus, 2002, p. 24). The key task for Murgitroyd is to build knowledge base about Intellectual Property Rights protection through advertisements and promotion in the industry before implication of the aggressive approach towards licensing and then innovate product or services according to the need of market to maintain uniqueness amongst the competitors. Select foreign business partner Murgitroyd & Company’s plans to expand its business operations in China would require a strategic partner. This partner would be a local firm that would have knowledge about the market as well as the legislative frameworks of the region. However the choice of the partner is crucial as it largely determines the success of the business venture in a particular nation. In this regard Murgitroyd would select a local firm that would be either a consultancy firm or a legal consulting firm based in China. The criterion for selection would also include the brand image, reputation as well as years of existence. These aspects would be crucial in determining the choice of a strategic partner for the organization. Certain other aspects that the company would take into consideration would also include financial and human resources of the partner, effectiveness and long term vision of the top management of the organization, the ability as well as willingness of the firm towards the joint venture, knowledge about the domestic industry, brand image of the firm in the market and its positioning among the members of the target market audience and finally the commitment and the loyalty of the organization to help sustain the venture in the nation (Cavusgil, Knight & Riesenberger, 2008, p.364-365). On the basis of the above conditions the company would chose DeHang Law Office that is a legal consultancy firm operating in China since 1993. The choice of the partner assumes significance as it is one of the most prestigious law firms of China and has considerable experience in the Chinese market. The firm is also approved by the government of the nation that makes it credible as a long term strategic partner (DeHang Law Office, n.d.). DeHang Law office would help Murgitroyd and company as it has significant expertise in the Chinese market and would help Murgitroyd and company with its expertise acquired over the years. The choice for a firm with no business interests in IPR has been deliberately taken as a local firm having expertise in IPR can lead to business conflicts. In this regard the choice of DeHang Law office assumes significance as they are in a related service of handling legal affirs of business organizations and hence this would reduce the instances of conflicts. The joint venture between DeHang would lead to a greater synergy and would also provide a symbiotic association that would help bridge the gap in the industry segment. Murgitroyd & Company would undertake a joint venture partnership with DeHang Law Office but would have a majority holding in the new subsidiary. This would help Murgitroyd retain management control over the organization. The local partner having minority stake would provide its expertise in the market to help grow the venture successfully in China. The local partner would also be responsible for legal advice, and also provide good references to kick start operations and to further penetrate the market. Murgitroyd would essentially undertake agreements that would help in ensuring confidentiality, pursuing infringements and ownership aspects including the shareholding pattern as well as management control issues. The agreement would also clearly lay down the clauses of termination of contract buy the local partner that would include returning the IPR’s and the related articles and documents post termination of the agreement with the joint venture partner. These agreements would serve to help in clearly specifying the roles and responsibilities of the local partner that would help in eliminating legal disputes that may hinder the functioning of the venture in China. It would further lead to generation of greater trust and bonding among the two partners that would help in establishing a good market share in the nation (Thomson, 2009, p.6-12). Estimate firm sales potential The Chinese market presents numerous opportunities for consultancy firms like Murgitryod. This is mainly because of the weak nature of copyright protection in China as well as the presence of a large number of local firms that largely produce fake and counterfeit materials (Thomson, 2009, p.6-12). Certain factors that would affect the sales potential of the organization would include the aspects of customer behaviour, competition, the competitive positioning of the firm, effort from the channel, pricing structure and receptivity of the customer. The Chinese market for patents and copyrights is still in the nascent stage hence customer characteristics would help favour the growth of the organization. In addition the large number of manufacturing organizations in China would hold innumerable potential for Murgitroyd and Company. Investment by foreign n firms like Motorola, Mitsubishi and biotech firms like GSK and Novozymes would hold attractive potential for the company considering the immediate need for protecting their research in conducted in the nation. Presence of comparatively smaller firms in the industry segment would also help Murgitroyd in this regard. The joint venture with a local firm would help provide these potential customers with a strategic amalgamation of European expertise and brand image of Murgitroyd & Company coupled with local understanding and market knowledge of the local joint venture partner would help cover the loopholes and provide an excellent volley of service that would help Murgitroyd emerge as the market leader in the upcoming 24 months (Thomson, 2009, p.6-8). On the basis of the potential in the Chinese market the sales forecast the company would set sales targets of 130,000 pounds in the first year. Subsequently the targets would be increased and the joint venture is expected to show profits by the end of the third year. Figure 2: Sales and Profit Forecast for Five Years (Source: Author’s Creation) Conclusion and recommendation The European Patent and Trade Mark Attorney practitioner, Murgitroyd & Company, is expanding globally into several regions worldwide for their business. China being a very promising market for expansion of different business activities Murgitroyd wanted to expand in this region. The company has a good workforce who is very efficient in their operation at UK. But for expansion at China the company need to involve the Chinese workforce which can be a difficult task for the management. The company working on the Patent and Copyright management can has a great potential at China due to the rise in the grey market activities in the market but on the other hand with the advancement of technologies at China the company might face great competition and might also face entry barriers to certain regions due to the legal system of the country. In order to enter the market and increase its sales potential the company should involve into promotional activities about their services to make people aware of about protection of their Intellectual properties and should also evaluate the proper distribution channel to expand their business. IT market is booming at China so the company should target this industry with their related products for a faster expansion process in the next 24 months. Distribution channel and local partners plays a vital role in managing the grey market activities and reduce risk from forgery. Murgitroyd should evaluate the legislative of the country carefully and manage the workforce and stakeholders under the jurisdiction of China. References Bohm, A. (2009). The SWOT Analysis. GRIN Verlag. Germany. Not complete (Changes done) Cavusgil, S.T., Knight, G. & Riesenberger, J.R. (2008). Global market opportunity assessment. Pearson Education, Inc. this is book and its the same the two references below (contents are based on same concept but materials are different) Cavusgil, S.T., Knight G. & Riesenberger, J.R.-a. (No date). Global Market Opportunity Assessment. [Pdf]. Available at: http://www.dallariva.org/csumba/mba602/Ch_12_Global_Market_Opportunity.pdf. [Accessed on June 25th 2011]. this is book not a BP slides (What exactly is meant by BP slides, it’s a pdf link as mentioned in the reference) Cavusgil, S.T., Knight G. & Riesenberger, J.R.-b. (2010). Global Market Opportunity Assessment. [Ppt]. Available at: http://www2.dsu.nodak.edu/users/rbutz/International%20Business%20Strategy/ppt/F08_Ch_12_Global_Market_Opportunity.ppt. [Accessed on June 30th 2011]. this is book not a PP slides (Link replaced) China Through a Lens. (No date). Major Cities. [Online]. Available at: http://china.org.cn/english/feature/38093.htm. [Accessed on June 29, 2011].the link don’t open (Link working , check again) DeHang Law Office. (No date). Introduction. [Online]. Available at: http://www.at0086.com/DeHeng-Law-Office/ [Accessed on June 29, 2011]. This firm is not an IPR company and its not related to the M&C works (the choice has been deliberately taken to include a firm that provides legal services but not IPR related services as including a IPR service firm as a partner would lead to joint venture with a competitors that would lead to business conflicts, hence a firm has been chosen that provides legal services but not in IPR related activities. This would lead to a better synergistic and mutually beneficial association). Evans, N., Campbell, D., Stonehouse, G. (2003). Strategic management for travel and tourism. Butterworth-Heinemann. Ferrell, O., Hartline, M., (2008). Marketing Strategy.4th edition. Cengage Learning. USA. Not complete (Changes done) Lawrence, S. (1997). Shrinking the globe into your company's hands: the step-by-step international trade guide for small businesses. Rayve Productions. Machigan State University. (No date). Distributors as Source for Foreign Market Identification. [Online]. Available at: http://globaledge.msu.edu/academy/hpgdtmlh/32new/global%20market%20opportunity%20assessment/player.html. [Accessed on June 28th 2011]. this is book not a BP slides (Changes done) Maskus, K. (2002). INTELLECTUAL PROPERTY RIGHTS IN THE WTO ACCESSION PACKAGE: ASSESSING CHINA’S REFORMS. [Pdf]. Available at: http://siteresources.worldbank.org/INTRANETTRADE/Resources/maskus_tips.pdf. [Accessed on: June 30th 2011]. Miele, A.L. (2000). Patent strategy: the manager's guide to profiting from patent portfolios. John Wiley and Sons. Murgitroyd Group plc, (2010). Directors’ report and financial statements 2010. [Pdf]. Available at: http://www.murgitroyd.com/sites/default/files/documents/Annual%20Reports%20and%20Accounts%202010.pdf. [Accessed on June 24th 2011]. Murgitroyd & Company-a. (2011). Locations. [Online]. Available at: http://www.murgitroyd.com/location/glasgow. [Accessed on June 28, 2011]. Npr, (2011). China Agrees To Lower Trade Barriers For U.S. Firms. [Online]. Available at: http://www.npr.org/2011/05/11/136197815/business-news. [Accessed on June 25th 2011]. Not Academic (No where mentioned earlier to use academic sources only) Pahl, N., Richter, A. (2009). SWOT Analysis - Idea, Methodology And A Practical Approach. GRIN Verlag. Tamer, C. (2009). International Business. Pearson Education India. The Economist. (2005). China: Intellectual Property Rights. [Pdf]. Economist Corporate Network. Q. IS this harvard style!? (This document was provided by you as supporting material hence we do not have the link or source) Thomson, C. (2009). An IPR Perspective on Exploiting the Chinese Market- Advantages and Risks. [Pdf]. Available at: http://www.i-ep.com/assets/files/IP%20Ireland%202009/IP%20ireland%202009%20-%20Presentations/Murgitroyd%20-%20China.pdf. [Accessed on June 28, 2011]. United States Department of Agriculture. (2008). SWOT analysis: a tool for making better business decisions. U.S. Dept. of Agriculture, Risk Management Agency. Poor. This is the official government book from U.S. Dept. of Agriculture, Risk Management Agency available at Google Books , hence it’s an authentic source and is difficult to replace. U.S Department of State. (2011). Background Note: Hong Kong. [Online]. Available at: http://www.state.gov/r/pa/ei/bgn/2747.htm. [Accessed on June 25th 2011]. Poor. This is the official government website of America, hence it’s an authentic website and is difficult to replace. Viboonchart, N. (2011). China will become IP leader in future, say experts. [Pdf]. Available at: http://www.nus.edu.sg/enterprise/enterprisezone-newsletter/public_mediacoverage/2011/Jan11/20110124%20-%20The%20Nation%20_24%20January%202011_.pdf. [Accessed on June 30th 2011]. Read More