Australian Software Company - Term Paper Example

«Australian Software Company» Table of Contents Overview 3 Structure of Market 4 India 4 France 5 Korea 5 Potential Size and Profitability of Market 7 India 7 France 8 Korea 8 Potential Problems in Selling to and Supporting of Market 10 India 10 France 11 Korea 11 Future Developments 12 India 12 France 13 Korea 14 Foreign Exchange Aspects 15 India 15 France 15 Korea 16 Import/Export Trade Barriers and Conditions 17 India 17 France 17 Korea 18 Preferable Market 19 Market Entry Strategy 20 References 21 Overview Market expansion is one of the major marketing strategies followed by any company throughout the world. Market expansion is basically conducted by a company in order to create new demand of their existing products, to create a demand for a new product or range of product, and also in order to target untapped market. International expansion is also very fruitful expansion strategy followed by a company for brand revitalization and in cases when a company’s product is not doing particularly well in their home countries market. In the provided scenario the Australian Software Company is looking to expand internationally by using their developed security system products for computers and related accessories. Structure of Market India Worldwide financial system has recovered and is growing after the recent downturn. Indian Economy, though just felt the drive of the global economic decline and the genuine economic expansion have seen a quick drop followed by the worse exports, corporate restructuring and capital outflow. It is predictable that the universal economy is carrying on being strong in the short-term because of the consequence of motivation which is still strong and the levy slash are operational. Due to strong situation of liquidity in the market, large businesses currently have right of entry to resources in corporate credit markets. The Gross Domestic Product (GDP) has grown in recent times. In 2008 it was 7.30%, 2009 it was 7.60% and in 2010 it currently is 8.30%. It is in an increasing trend (Ease, 2010). India's foreign exchange reserves have shown an increase in the last few years. Real estate sector as well as information technology industries in Indian market both domestic as well as international companies have taken off. Capital markets of India have been performing better. All these factors have contributed to growth of Indian economy (The Economist, 2010). France France is in the middle of conversion from a well-to-do recent economy that has facet of wide-ranging government rights and involvement to one that depends more on market system. The government is partly or fully privatizing many companies. France is the most favorite vacation country in the world and preserves the third major revenue in the world from tourism. The GDP of France in the year 2007 was $2.152 trillion; in 2008 it was $2.158 trillion and in 2009 it was $2.113 trillion. There had been an increase but again it has decreased to some extent recently (ITA, 2010). The official GDP exchange rate in 2009 was $2.635 trillion. The GDP - real growth rate in 2007 was 2.3%, in 2008 it was 0.3% and in 2009 it was -2.1%. There has been a decrease in the GDP rate. It is showing a decreasing trend. The GDP per capital (PPP) in 2007 it was $33,800, in 2008 it was $33,700 and in 2009 it was $32,800. It has been noticed that it gives an average of $33,000. Either increased or decreased, it lies in that range only (ITA, 2010). Korea The global crises had also hit the Korean market. Korea is trying to improve its market through its exports. Enhancements in exports guided to an increase in purchasing power, which in turn has developed home consumption situation. The rises anticipated in the agreement with the external sector and the national market, unlike a year ago has gone through a huge change. The currency appreciation tendency may carry on, which will make it firm to expand the world market share. In 2009 the standard operation rate of manufacturing was 80 percent, the index was the same number as the level before the economic crisis. Competence investment development among the export-boom industries are still anticipated to increase. Due to the propensity of protectionism in the world market, Korean corporation predicted the requirements of localization to attract more overseas investment. The development of software and industrial services is expected to accent investment on intangible assets more than a capacity extension to the national market. Korea is projected to develop on exports approximately 20%. This is due to soaring export exposure to ASEAN, China, and developing couturiers accounted a superior growth. The financial market is on the steady path since 2009. As the credit increase has trip to 100bp, it made a revival to the preceding stage. And foreign investors’ net acquisition of stock and bond is ongoing progressively on a growing path. In signifying the recent scenario, currency rate is anticipated to be the normal level of KRW 1,100. Thus, foreign investment resources will be positive due to net flows. The foreign investment inflows are projected to increase rationally in size (KOREA IT TIMES, 2009). Potential Size and Profitability of Market India The Indian economy and the financial sector are recurring to a potential growth related path after amendment to deep displacement in the worldwide economic situation. It is expected that there will be an increase in the growth rate in the market in 2010. It is also expected that the loan growth rate will rise to 20% in 2011. The return from equity will rise from 13% to 17% in 2011 (The Wall Street Journal, 2010). The market size is huge in India with different sectors prevailing in the country in constant development in the economic condition. Due to the large market size it has huge potential in absorbing huge category of national as well as international products and services. India’s exports improved by 9.3% and is at $14,606 million, while its imports mature at 27% and was at $24,753 million during December 2009 and it is expected to grow more by 2011 (The Economist, 2010). Indian economy is the three most attractive Foreign Direct Investment (FDI) destinations in the world. India has evolved into one of the world’s leading technology centers. India has the highest returns on foreign investment. The Indian market has two core advantages. There is an increasing presence of multinationals and upswing in the IT exports. In 2010 GDP is $900 billion, GDP growth rate is 9%, Services contribution is 60-65%, FDI limit is expected to be 100% in main industry sectors such as Automobiles, Telecom, Semiconductors, and many more. Balance of Trade is expected to be positive with improved level of exports as evaluated along with imports, and investment goal is $370 billion. There is huge potential of profitability and growth in Indian market for investment. France The French Government had forecasted that there will be an increase in the growth of economy by 2.5% but now it has predicted that it will grow till 2%. There has been a decrease in figure in the imports of France. In 2008, it was $692 billion and in 2009 it was $532.2 billion. The market for imported merchandise has shown a decrease. The economy of the country is not consuming much. There is a 19% of industrial consumption. France is the second largest country in Europe in terms of trade. France is the fifth ranked country in the world for imports. The country has potential in terms of import (Altius Directory, 2010). There is scope of foreign merchandise to be absorbed in the French market as imports are high in this market but the return or the market ability to provide a better profitability is in question as the GDP has been cut recently and there is a negative slope in the economy. Korea Korea is currently the fifth fastest growing nation among G20 nations and expected to be in the fourth place by 2011. There is positive growth expected in the economy of Korea. Korea’s strong financial resources and competitiveness in exports are the major area that will increase the potential of the Korean market and cash flow will be increased increasing the profitability (KOCIS, 2010). There is demand for complex and sophisticated technology in Korea. Korea has been involved in R&D for many years due to various internal as well as external factors. They focus upon technical development with much focus in R&D (Chung, 2005). Due to external and internal force in Korean market there lies potential in the market. The major focus in Korea is the R&D of products. Improved and highly sophisticated products are given more advantage by the government and they promote in R&D of such products. Potential Problems in Selling to and Supporting of Market India There are certain trade restrictive practices with compliance to General Agreement for Trade and Tariff. The imports for Australia are subjective to bilateral agreement between India and Australia. The balance of trade between the two countries depicts it to be in favor of Australia. The market is huge and the segmentation want be easy. There are different players both at national as well as international level. China plays an important role in Indian import of technical goods (Consulate General, n.d.). China might be the biggest competitor of Australia in this category. There are import duties upon technical goods and import of technical devices for commercial as well as non commercial purpose. Indian market is still developing and in technical advancement it has mostly imported technical devices and up gradation from overseas. There is diverse culture in the Indian market and the corporate cultures of different corporations are different in different regions. The acceptability of the technical product in this market depends upon the cost, quality and durability of the product. As Indian people focus more upon cost, durability and quality of the product, it needs to market in that way. France The GDP growth rate is very low and market is subjected to EU Regulations in France. There is instability in the system. Exchange Rate Mechanism (ERM) was able to bring stability but after UK and Italy left the ERM it is more subjected to instability. France was able to bring down the inflation rate but with the cost of high unemployment. There is higher level of unemployment in the market demanding less in the market. With a cut in GDP growth rate and increased unemployment, makes the French market more volatile in nature. The technical products market is not that wide spread in France. France is most treated as a destination place and peoples all round the world come here and it adds revenue to France. The market is restrictive and saturated for this kind of products. Korea Korea is more into R&D of products and the government generally encourages for such activities to employ more technical devices which are advanced in nature. Therefore instead of importing they prefer R&D in their own country and get the commercial use of products in the Korean as well as in overseas market. Korea limits 92% of its tariff line items as a consequence of the Uruguay Round negotiations with its general average tariff at about 7.9%. There is a flat 10% Value Added Tax on all imports and domestic produced goods. This way the product price will tend to increase more than the nationally produced goods. Future Developments India The Indian economy is growing and its FDI schemes are generating more return. The market is more attractive and there is an opportunity for growth in this market. It is expected to raise its GDP. The market is free to entry with compliance to different rules set up by Government of India. The financial market has shown an immense stability and currently is growing than any other financial market in the world. The stability is there in the market as Government rules and regulations are there to keep the market conditions under control. France The French Government is expecting more GDP growth as well as higher return in the market. The Government is taking steps in increasing the trade activities to increase the economic conditions of France. The focus is more upon the export rather than upon import, to increase the inflow of cash in the economy. The major strategy is to export rather than import as the economy is not that grown and has huge unemployment in the market. To bring the economy up to certain level it needs to increase its exports, then only French market will be developed in adopting new changes. Korea The Korean Government is more focused upon R&D in the country to develop more advanced technology for their self utilization and export purpose. The Korean Economy is to face new challenges as it mostly depends upon the political leaders and government policies for current economic situations. Korea is retrieving from the current global financial crises and gaining back the strong financial system which will take a longer period of time. At this point of time the market conditions are volatile and have the potential to increase in future (The Korean Embassy, 2000). Foreign Exchange Aspects India In India all the transaction of foreign exchanges are regulated by Foreign Exchange Management Act (FEMA). It is established to assist “external trade and payments and to promote the orderly development and maintenance of foreign exchange market” (Government of India, 2010). FEMA permits only authorized person to deal in foreign exchange thus companies (foreign) requires making certain of the regulating bodies and authority with whom they should deal with. Reserve Bank of India (RBI) is the authorized government body to regulate FEMA. The “rules, regulations and norms pertaining to several sections of the Act are laid down by the Reserve Bank of India, in consultation with the Central Government” (Indian Government, 2010). France In France, Foreign Exchange market processes are executed by a number of banks and Foreign Exchange Trading agencies. Exchange rates are “regulated by the Bank of France (Banque de France) and are dependent on the exchange rate of the Euro with foreign currencies” (compare Info base Limited, 2010). The France Bank is the regulator of all foreign deals and regulates to maintain stability in the French economy. To regain and maintain the economic growth French Government is using it trade practices in imports and exports. Korea The Foreign Exchange Control Act (FECA) is the statutory frame work that governs all the foreign exchange activity n Korea. The Ministry of Finance (MOF) utilizes final legal authority over essential areas and aspects of foreign business operations and foreign investment in Korea. The Ministry of Trade and Industry (MTI), exercise authority over trade and manufacture of goods, exporting and importing, and in certain areas of technical cooperation in Korea. Bank of Korea can approve foreign investment without prior consulting with other ministries (Genzberger, 1994, p. 168). Import/Export Trade Barriers and Conditions India India is in agreement with GAAT and needs to follow the agreement. Indian economy is mixed in nature and also allows trading in by international companies. Mostly it is focusing upon the export rather than import. With Australia the balance of trade is in favor of Australia. This might either be in favor or against the venture in Indian market. It depends upon the trade practice that might or might not create barrier. The economic conditions are being attractive thus it might not be a barrier in operations. France France trade practice is based upon the EU. The economy is focusing upon both import as well as export to enhance the economy. The main barrier that is going to be faced is the entrance in the French market with legal compliance of EU which might be the barrier. The Bank of France might make the trading at a hard level with all trading polices for operation in the market as many tourist visit the country. Due to the economic condition, it might be the reason for a barrier for the Australian company in entering and operating in France. Korea Korean Government is more focused upon R&D of the country. This R&D projects are not only at government levels but also at private levels encouraged by government. The R&D might be the barrier in importing of these goods from Australia. The approval of FECA, MOF and MTI for the business might not be in action if BOK refuses the trading. BOK might be the barrier in business operations in Korea. Regulations need to be securitized in Korea properly for smooth running of the business. Preferable Market The Indian market is growing in recent times and expectations of growth are more in the global economy. It has been less affected by the global financial crises and has been able to show lots of potential in growing. There is a wide range of scope for the company in this market. The French economy is growing in a very slow rate and it will require a lot of time to come back to a position in the global economic situation. There is lot of cut downs along with huge unemployment in the market leading to unsustainable marketing conditions. The product might get accepted or fail in such conditions. The government is more focused upon export rather than import to boost the economy. Korean Government is more focused upon R&D in the country and promoting it for the economic development through its utilization in the country as well as exporting it. The Korean market is still retrieving from the global crisis and trying to maintain a stable economy. The product might get accepted by people but government intervention might create barrier to the products. These markets have different characteristics and government policies but seeing from the future perspective, India is a promising market with huge population and market size and good for Australian companies to trade as they share a positive trade relationship. France is the next option as it is associated with EU and might turn in a potential market in future but it will take time in being so. Market Entry Strategy The cost-effect analysis is required for the market in entering the area of operations. A systematic advancement should be employed as a market-entry strategy. It will allow creating well sustainable and intention based strategy that extract maximum worth from domestic assets and investment, and eventually provide secured revenue and increased competitiveness. It will help in decreasing the financial instability and enable market risk and perception control through contingency planning. The initial business plans needs to be revised for the better correspondence with market position and conditions. The systematic advancement will provide a framework for successive planning of tactical launch activities and coordinate and priorities task for the launch team. While entering the market there is immense pressure, internal as well as external expectations, and these pressures can be minimized by developing a clear and structured market-entry strategy and along with this a effective functional plans for achievement of the objectives. An internal SWOT analysis, market dynamics and identification of strategic risk area will minimize the level of risk in the new market. Analysis of appropriate macro economic data that determines the market and segment growth will provide potential input to the strategy development for achieving the target audience through various marketing strategy. Indian market is wide spread and lots of segment needs to be uncovered in market analysis and also dealt with different strategies at local levels but overall strategy for India need to cover all regions for capturing the whole market. References Altius Directory, (2010). France Economy 2010. The Economist. Retrieved Online on October 7, 2010 from http://www.altiusdirectory.com/Business/france-economy.php Chung, S., (2005). Technology Innovation and Economic Growth Korean Experiences. Science and Technology Policy Institute. Retrieved Online on October 7, 2010 from http://info.worldbank.org/etools/docs/library/144056/Technology_Innovation_and_Economic_Growth.pdf Consulate General, (No Date). India Australia Trade Brief. Consulate General of India, Sydney. Retrieved Online on October 7, 2010 from http://www.indianconsulatesydney.org/australian_trade_brief.htm Ease, N., (2010). Indian Economy 2010 Overview: Development in the Global Economy Post Recession. VMW Research. Retrieved Online on October 7, 2010 from http://vishalmishra.wordpress.com/2010/01/12/indian-economy-2010/ Genzberger, C., (1994). Korea business: the portable encyclopedia for doing business with Korea. World Trade Press, pg-168. KOREA IT TIMES, (2009). The 2010 Economic Outlook for Korea. IT Times. Retrieved Online on October 7, 2010 from http://www.koreaittimes.com/story/8548/2010-economic-outlook-korea KOCIS, (2010). Korea's economic growth 5th largest among G20. Overseas Information Center. Retrieved Online on October 7, 2010 from http://www.korea.net/news.do?mode=detail&guid=49972 ITA, (2010). France Economy 2010. Economy Overview. Retrieved Online on October 7, 2010 from http://www.theodora.com/wfbcurrent/france/france_economy.html Indian Government, (No Date). Legal Aspects. Foreign Exchange Management Act (FEMA). Retrieved Online on October 7, 2010 from http://business.gov.in/doing_business/fema.php The Economist, (2010). India Economic Review. Economy Watch. Retrieved Online on October 7, 2010 from http://www.economywatch.com/economic-review/india.html The Wall Street Journal, (2010). Indian economy returning to potential growth path: Goldman. PTI. Retrieved Online on October 7, 2010 from http://www.livemint.com/2009/06/21123758/Indian-economy-returning-to-po.html The Economist, (2010). India’s economy to grow 8 percent by 2011-12: World Bank (Lead). Thaindian News. Retrieved Online on October 7, 2010 from http://www.thaindian.com/newsportal/business/indias-economy-to-grow-8-percent-by-2011-12-world-bank-lead_100313184.html The Korean Embassy, (2000). Korea's Economy. Overview. Retrieved Online on October 7, 2010 from http://www.asianinfo.org/asianinfo/korea/economy.htm Read More