International marketing: case of Vodafone in Afghanistan - Essay Example

International Marketing (Vodafone in Afghanistan) Table of Contents Page No. Please I want all citation in bold so the reader will know directly the source which I used 3 1.0 Introduction 3 2.0 Entry Strategy 4 2.1 Licensing don’t write advantage and disadvantage use the proper term please 4 2.2 Joint Venture need another author for this paragraph as this will show the quality of research 5 2.3 Acquisition 5 2.4 Investment via Ownership or Equity Stake use foreign development investment(FDI) 6 3.0 Justification for Entry Mode (Joint Venture) 6 3.1 Equal Status 7 3.2 Cost Reduction 7 3.3 Flexibility more discussion in this paragraph 7 3.4 Exchange of Expertise 8 3.5 Fast and Cheap Process 8 4.0 Conclusion 9 5.0 References 10 6.0 Appendix Use different author for citation please 13 Please I want all citation in bold so the reader will know directly the source which I used 1.0 Introduction (Don’t write ‘I am writing this report ‘this report is for Board of Directors use another term please, for example the author name is (marketing analyst) hope to address this report) The marketing Analyst is writing this report to critically evaluate four market entry strategies for Vodafone Group plc and to select the suitable option for its entry to the prospective market of Afghanistan, which is a developing country. Vodafone Group plc was set up on 1st January 1985 in Newbury, United Kingdom. In the next nearly 30 years, it has expanded in around 30 countries with partnerships with over 50 networks globally. Presently, over 400 million international consumers of this company prefer the offered telecom services. Besides, most recently, in terms of products, Vodafone 150, a reasonably priced handset has been launched. Moreover, the range of products and services also include other Vodafone branded handsets, smartphones, voice & messaging services and total communication services. Total communication services include data services, fixed services (Vodafone, 2010; Vodafone Group plc, 2014). In the UK market, Vodafone holds around 17% of market share as of February 2013 and is behind O2 (Statista, 2014). With regard to 12C framework, it can be observed that the political, legal along with economic scenarios of a nation where a company intends to operate can have a major impact on its stability. With the help of government support the use of telecommunication services is increasing in the global context. Moreover, the increasing trend of using updated telecom services can be favourable for Vodafone to establish its prominent position in the global platform (see Appendix). 2.0 Entry Strategy Entry strategy in global business market is the scheme to deliver services or products to a new target market. This strategy helps an organisation to understand the foreign market and to establish its business operations based on the discrete requirements of the market. A few of the suitable market entry strategies for Vodafone to enter in the Afghanistan market are licensing, joint venture, acquisition and investment via ownership or equity stake (Lambin, 2007) 2.1 Licensing don’t write advantage and disadvantage use the proper term please To enter in an external market with less risk, licensing is one of the best entry methods. It is in general applicable for a longer term and engrosses greater responsibility for the local producers. The international licensing firm provides the licensee patent rights and trademarks rights and in response the licensee will manufacture the licensor’s product and the product has to be marketed in the licensee’s consigned area. In addition, the licensor has to be paid the royalties associated with the sales number of the products (Dawei, 2008). The pro of licensing for the foreign country is that it transports technology into the country. The benefit of the licensor is the convenient market that can be used easily. The main difficulty of licensing is to control the foreign firm from distance and absence of direct obligation from the international firm surrendering the license. Consequently, after few years, once the copyright is removed a risk has to be there that the licensee may start to proceed on its own and the licensor may for that reason lose the market. Vodafone can follow this strategy to enter the market of Afghanistan. However, as a telecommunication service provider, it has to be dependent on the local companies for this strategy. Accordingly, control power of Vodafone will be missing eventually, which will not be beneficial for the growth prospect of the company. 2.2 Joint Venture need another author for this paragraph as this will show the quality of research Joint venture is a system of merging capital to accomplish certain objectives. In this strategy, two or more major companies combine their resources to obtain that objective under the joint management of the major company. Foreign joint venture as an entry strategy is almost similar to licensing with certain dissimilarities. The international firm has impartial position and management influence in the foreign firm. This kind of agreement provides the international firm stronger authority over business and also gives the right to use the local market knowledge. For this partnership, the international firm is not much exposed to the risk of expropriation and the firm contains the accessing power to the system of relationships of the foreign firm (Lexisnexis, 2011; Tuck School of Business at Dartmouth, 2006). This strategy is extremely admired by the international business management. The popularity of joint ventures arises from the fact that it reduces the control or authority problems that can be observed as a major constraint with the other foreign market entry strategies. Moreover, the international firm has the extra facility of market knowledge of foreign market with the equal power similar to the foreign company. This strategy can be applied to enter in the market of Afghanistan for the reason that this country is improving immensely in telecommunication sector and the civilization is different from the other global countries. Vodafone will be a step ahead if an agreement is done with a local established company of Afghanistan as Vodafone can acquire the local market without any risk along with ensuring strong management power. 2.3 Acquisition Acquisition is a market entry strategy where one company or business entity purchases another company or business. In addition, the purchase may be of 100% or partial regarding possessions or ownership equity of the obtained entity. The purchase in acquisition can be done as being friendly or hostile, which is entirely dependent on the way the proposal of acquisition has been communicated to the target company’s stakeholders, workers and management. This is owing to the reason that during the acquisition agreement, it is normal that there will be a part wherein the flow of the information will be restricted according to confidentiality agreement. Consequently, with this negative aspect, the target company’s board and management can refuse to be acquired or they have no earlier awareness of the proposal. However, in the case of a friendly transaction, the target company collaborates to indulge in discussion (Investopedia, 2010). 2.4 Investment via Ownership or Equity Stake use foreign development investment(FDI) Another market entry strategy that can be followed is investment via ownership or equity stake. In this strategy, the international firm can own and operate their business independently in the foreign market. The international firm will not be bounded to create any partnership with any foreign firm to establish their business; as a result there will be no influence from outside. The knowledge of the foreign market has to be gained by the international company in terms of risk as well as the prevailing political, economic factors along with other difficulties in the infrastructure that might have to be encountered. With this strategy, many aspects will arrive like the cost of development, the difficulties of infrastructure and a peril will be there that the products may not be sold in the new market. The internationalising company can enlarge its business without any dependency into additional prospective global markets and can achieve maximum level of market accomplishment (The Nest, 2014). 3.0 Justification for Entry Mode (Joint Venture) It is observed that regarding the procedure of licensing, there is less risk to enter in a market but due to the distance factor there will always be a prospect to lose control of the market after certain time. For joint venture, it can be noticed that the international firm and the foreign firm both of them share equity position and equal control over market with strong management power. In the case of acquisition, there will always be a pessimistic or optimistic point of view for the reason that the agreement of acquisition mainly end up with total or partial takeover. Ownership, on the other hand, is an independent strategy to be used by the company but there are certain critical risk factors that need to be addressed prudently. Consequently, it can be ascertained that joint venture as an entry strategy to a foreign market will be justified and safer for the future prospect of Vodafone. The reasons for emphasising joint venture as the most suitable entry strategy for Vodafone (UK) in the market of Afghanistan are illustrated and justified below: 3.1 Equal Status In the agreement of joint venture, it can be observed that both of the companies can make their status equal in management and authority power along with sharing an equivalent access in the foreign market. Moreover, the positive side of this agreement is that the co-venturers remain transparent about the assessment of contributions, cash top-up as well as equity prospects along with the possession of intellectual property and the customers succeeded by the partnership. So both the firms can acquire benefit from the market. Vodafone can enter in Afghanistan market with this strategy as the company will have the convincing helping hand of the local firm and equal authority to access the customers of Afghanistan (Ricks & et. al., 1978). 3.2 Cost Reduction Moreover, reducing cost is another positive aspect of joint venture. Joint ventures permit the co-venturers to split the cost of improving their service as they merge their knowledge, distribution channels and the process of service offered. Therefore, both of the companies can reduce their cost cutting particularly for the duration of an economic breakdown. Besides, joint venture ensures mutual advantage for both the companies through scattering the high risk and extensive costs of exploration as well as growth, which in turn allows them to equally derive benefit from each other’s know-how, ability and intellectual assets that are mutually owned (Lexisnexis, 2011). 3.3 Flexibility more discussion in this paragraph Flexibility is an additional advantage of joint venture strategy that convinces to utilise it as an entry mode to foreign market. Due to the lack of detailed regulations that are applicable for corporations as well as partnerships, it provides co-venturers immense contract of flexibility of organising their arrangements and determining their privileges along with responsibilities. Moreover, due to this, flexibility option venturers can use any legal points and can prepare the agreement without any difficulty. As a result, the foreign country and the international firm both of them stay secure with the equal responsibility and ownership. This in turn enables the two parties to ensure sustainable existence in the long run (Ricks & et. al., 1978). 3.4 Exchange of Expertise The joint venture structure allows the co-ventures to exchange their possessions and technical expertise as well as the funds. A small company with the tenure of exploration may face a lack of fund to perform exploration. On the other hand, the larger company with the interest of exploration would like to use their technical support as well as the knowledge through a joint venture rather than exploring individually. Hence, both the companies can achieve profit by exchanging their expertise, technical support or investment (Ricks & et. al., 1978). 3.5 Fast and Cheap Process One obvious advantage of joint venture is that it allows much quicker and less expensive admission to foreign markets rather than procuring an existing company in the authority or opening a new endeavour. Moreover, the benefit such as having easy access to local language and tradition, with the help of local companies, would be crucial for Vodafone to attain greater prominence in the foreign market of Afghanistan In this regard, it can be highlighted that Vodafone recently accomplished a partner market agreement with Roshan, one of the foremost telecommunication companies in Afghanistan. And, in near future, there will be maximum users of M-paisa for transferring their fund through Vodafone connection due to the unbanked situation of the population of Afghanistan. Despite the fact that they are already in agreement however if it is converted to joint venture agreement both the companies will be in better position in future because of the determined justifications (Roshan, 2011; Sebenius, 2002). Can you please use another author as well in this whole paragraph so it show the quality of work 4.0 Conclusion For an international company such as Vodafone, it is very important to review and calculate a plan to enter in the market of a developing country such as Afghanistan, which in recent years faced significant crisis due to domestic issues and violence. To enter in a foreign market prosperously, a few prominent strategies can be followed including licensing, joint ventures, acquisition and ownership. Vodafone is aiming to take entry in Afghanistan market which has recently started to show greater development in the field of telecommunication services. Therefore, Vodafone has to choose an ultimate local partner to enter the market of Afghanistan. It is ascertained that partner market agreement between Vodafone and Roshan has been done already and they are exchanging their expertise to enhance the partnership. Thus, if the joint venture agreement is conducted between both of them it will be profitable for both the companies. For Vodafone, it is one of the best moments to explore the relatively unchartered territory of Afghanistan through joint venture to ensure profitability of the company. 5.0 References Books and Journals: Bhatia, B. & et. al., 2006. Transforming Telecoms in Afghanistan. Unites States: Grid Lines. Dawei, G., 2008. Internationalization and Entry Strategy of Enterprises. Sweden: University of Halmstad. Lexisnexis, 2011. Joint Ventures. Australia: Overview of Joint Ventures. Lambin, J.J., 2007. Entry Strategies in Foreign Markets. United Kingdom: Palgrave Macmillan. Ricks, D.J. & et. al., 1978. Cooperative-Corporation Joint Ventures. United States: Michigan State University. Baharustani, R., 2013. Study of Afghan Telecom Industry. Afghanistan: Afghanistan Investment Support Agency. Sebenius, J.K., 2002. The Hidden Challenge of Cross-Border Negotiations. United States: Harvard Business Review. Tuck School of Business at Dartmouth, 2006. Strategic Partnering: Managing Joint Ventures and Alliances. United States: Thought Leadership Roundtable on Digital Strategies. The Asia Foundation, 2012. Afghanistan in 2012. San Francisco: A Survey of the Afghan People. Wentz, L., 2008. Information and Communication Technologies for Reconstruction and Development. United States: Center for Technology and National Security Policy National Defense University. Online Resources: Commission of European Communities, 1995. The Impact of Currency Fluctuations on the Internal Market. Forward. [Online] Available at: http://aei.pitt.edu/2833/1/2833.pdf [Accessed April 11, 2014]. E-Government of Afghanistan, 2013. Ministry of Communication & Information Technology. Islamic Republic of Afghanistan. [Online] Available at: http://mcit.gov.af/en [Accessed April 11, 2014]. Investopedia, 2010. The Basics of Mergers and Acquisitions. Introduction. [Online] Available at: http://i.investopedia.com/inv/pdf/tutorials/ma.pdf [Accessed April 11, 2014]. Roshan, 2011. Roshan and Vodafone Sign Strategic Partner Market Agreement. Afghanistan. [Online] Available at: http://www.roshan.af/Roshan/Media_Relations/News/News_Details/11-12-07/Roshan_and_Vodafone_Sign_Strategic_Partner_Market_Agreement.aspx [Accessed April 11, 2014]. Statista, 2014. Mobile Phone Operators Market Shares In the United Kingdom (UK) 2013. Telecommunications. [Online] Available at: http://www.statista.com/statistics/279993/market-share-of-mobile-phone-operators-in-the-united-kingdom-uk/ [Accessed April 24, 2014]. The Nest, 2014. Five Modes of Entry into Foreign Markets. Budgeting Money. [Online] Available at: http://budgeting.thenest.com/five-modes-entry-foreign-markets-25303.html [Accesses April 24, 2014]. Vodafone Group plc, 2014. Vodafone Group. About Us. [Online] Available at: http://www.vodafone.com/content/index/about/about-us.html [Accessed April 11, 2014]. Vodafone, 2010. Products and Services. Business. [Online] Available at: http://www.vodafone.com/content/annualreport/annual_report10/business/products-and-services.html [Accessed April 24, 2014]. 6.0 Appendix Use different author for citation please 12C Framework: 12C Variables Country / Company Factors Country Use PEST Vodafone needs to consider the stability of political, economic and legal situations before entering a foreign country. A stable market scenario in a foreign country can be prosperous for Vodafone. Political climate of Afghanistan is becoming suitable for entry, while the economy is also showing a sign of recovery. The social scenario in the nation is becoming consumer friendly. The nation is also witnessing the influx of more technological knowhow amid the consumers. Currency The fluctuation of a country’s currency with respect to set standards such as US Dollars can have a major impact on Vodafone’s operations (Commission of European Communities, 1995) Culture Need to focus more Cultural distinctions especially between eastern and western culture is required to be considered by Vodafone particularly while operating in the Asian region of the world. Accordingly, in Afghanistan where the culture is quite conservative the company needs to ensure more collaborative approach to succeed. Control & Co-ordination The employment of countries such as Afghanistan needs sustainable jobs to expand their knowledge (The Asia Foundation, 2012)Use another Concentration (of Market) International operations of Vodafone in nations such as Afghanistan having quite less population can be effective to expand its reach in the respective market (Baharustani, 2013). Commitment Need more clear factor For Vodafone, the commitment of it and its partner in strategies such as joint venture can be crucial for international expansion (Bhatia, B. & et. al., 2006)Use another reference Communication Ministry of Communication and IT provides high quality communication and IT services to the afghans (Wentz, 2008). Choices (of Consumer) With the constant improvement, the consumers of major operating nations of Vodafone tend to use modern and updated telecommunication features which can be beneficial for the company (Bhatia & et. al., 2006) Channels of Distribution As Afghanistan already has efficient local operators, Vodafone will have the convenient source of distributors (Bhatia & et. al., 2006). Contractual Obligation Discuss more clearly do not use’ will’ type words. Afghanistan’s local operator would obtain a modified and technically strong system to handle and Vodafone will have the market for their business expansion. Thus, both the companies will be capable of fulfilling their needs (Baharustani, 2013). Capacity to Pay This as well change focus on Afghanistan In recent years, global telecommunication market is expanding rapidly. Moreover, there is substantially rising demand and purchasing capability amid the consumers in Afghanistan which would be beneficial for Vodafone (Hamdard, 2012). Caveats This is not accepted please change here as well The recent scenario in Afghanistan due to undesired influence of certain forces has remained somewhat unpredictable which needs to be considered by the company. Read More