Foreign Market of Touch Technologies - Case Study Example

Foreign Market Analysis EJ’s Innovations and More offers consumers products that are highly innovative and creatively address their needs. Taking into account the latest ‘touch’ technologies, EJ’s has created a line of computers – both PCs and laptops – that offer touch-screen and voice recognition features that specifically target people who seek these benefits for their convenience and zing. EJ’s has a presence almost all over the United States and is planning to take the step to expand operations globally. This report underscores the opportunities available for such a company in a foreign market. The recommendation is that EJ’s Innovation and More should kick start their global operation by stepping into Canada. Canada happens to be the main export destination for 36 out of the 50 States in the U.S. and ranks among the top three in another 10 states (state.gov, 2008). The U.S. and Canada have a very unique and world’s most comprehensive and extensive trading partnership; with the North American Free Trade Agreement in place, trade between the two countries has exceeded $560 billion. The implication of these facts for EJ’s Innovations and More is that Canada is a very open economy, with extensive history and infrastructure of trade with the U.S. and these make it the obvious first choice for an American firm that wants to start expanding internationally. Also, Canada is a highly ‘economically and technologically’ developed nation (cia.gov, 2009) with a burgeoning market for tech products and innovations, as those developed by EJ’s. Demographics Canada has a population of around 33.5 million people. The main age cohorts show that around 68.7% of the population is between 15-64 years and 15.2% are above that (cia.gov, 2009). This huge percentage of people is concentrated in the cities as the urban population is over 80%; also, this population is concentrated in areas which are very close to the U.S. border making them physically and socially very accessible to EJ’s. Canada has a very high literacy rate of 99%; the computer literacy rate, consequently, can be taken to be high as well. Market Environment The Canadian economy, despite having a smaller population, is very similar to the U.S. economy in terms of its ‘market-oriented economic system, pattern of production, and affluent living standards’ (cia.gov). The Canadian economy has shown a steady economic growth, with increasing GDP each year until 2008, when the economic recession brought growth down dramatically all over the world. As the U.S. and Canada have highly linked economies, the ‘U.S. housing slump, plunging auto sector demand’ and then the falling commodity prices all have a combined impact on Canada (cia.gov). However, Canada has lately shown signs of recovery based on its highly stable banking system and energy backup. Based on the NAFTA, most of American products – exempting some agricultural products- can be imported into Canada duty free, which will allow EJ’s to offer a competitive price to its customers. There are also few barriers in place (buyusainfo.com, 2009), especially on consumer appliances and computer hardware. These factors contribute to Canada being the perfect international destination for a newly global American company. America and Canada also have cultural and social links with the people living in both countries having a similar lifestyle and considerably same buying behavior. With its highly educated and technology-savvy population, Canada is the perfect market for an advanced computer product that offers unique and specialized features. Target Market EJ’s will provide computers with different styles and colors which will serve the needs of all types of customers who are urban, educated and open to innovation. Specific product segments will target older people with impairments or disabilities, who actively seek products with features like voice recognition that make ‘digital’ life a bit easy for them. The different styles and colors will attract the younger market. Product variations and capacities will also suit individual or home consumers as well as bigger business consumers. Effects of the foreign environment on the marketing operations Despite the numerous similarities between the American and Canadian consumers, EJ’s will still be operating in a foreign environment and market. The means that EJ will have to get a team on board that is well-versed with the market dynamics of the territory and understands the consumer better. A simple example is that even though both Canadians and Americans speak English, there is a significant population in Canada that speaks French. Therefore, when EJ will be marketing the product in predominantly French-speaking territories, the company will have to adapt the marketing campaigns accordingly (e.g. whether the TV advertisement should be in French or English). Also, the team must be perfectly cognizant of the various customs and practices that affect consumer behavior in Canada, to avoid any unintentional faux pas on the part of the product managers. This means, certain people might have the habit of purchasing equipment from departmental stores only, rather than specialized computer shops. This buying behavior, being specific to a territory like Canada, will require specific market knowledge and expertise to capitalize on it. Entry Strategy The best method of entering the Canadian market would be to have a joint venture with an established Canadian computer equipment firm. The most important benefit of this strategy would be the easy entry into the customer market through an established name that Canadian consumers are already familiar with. Customers would already be aware of the company vis-à-vis the company would have good understanding of the consumer psyche and needs. Canadian government is also very flexible with the forms of joint ventures and equity percentages between the parties (buyusainfo.com), compared to other nations in the world, which will allow EJ’s to still have major control over the operations and business decisions. Furthermore, the partner firm will already have an established customer base that EJ’s would be able to tap into. The possible drawback, like in any other joint venture agreement, would be that the relationship between the two firms could turn sour and thus, would need to be played along, by both parties, with utmost care and tact. Also, EJ’s will have to rely on and trust the expertise and sometimes suggestions presented by the joint venture firm which it might not completely agree with or understand superficially. To curb these possible problems, EJ’s must conduct thorough research and scrutinize the applicants before forming any alliance with them. I would also recommend that once gaining proper knowledge of the Canadian consumer and getting acquainted with him, EJ’s Innovations and More can become a ‘non-resident importer’ (buyusainfo.net). The initial entry will be in the form of the joint venture but once the business is established, EJ’s can buy out the equity and become non-resident importers. This is another advantage of doing business with a country like Canada, which has an established U.S. commerce department that will help out the American firm in such situations.    Summing up, EJ’s is making a good decision in planning to expand business into other countries. Not only will this be great for business, but the company exposure and brand value will increase, allowing it to establish economies of scale and adopting best practices from other nations. For a company like EJ’s, the best option would be to travel into a friendly and open country like Canada, which has a huge market for computer goods and the consumers also have the needed buying power. Taking into account the major considerations mentioned in this report, within a few years EJ’s will be ready to embark into even more territories. References Background Note: Canada (2008). U.S. Department of State. Retrieved from http://www.state.gov/r/pa/ei/bgn/2089.htm Doing Business in Canada (2009) [PDF Document]. US Commercial Service. Retrieved from http://www.buyusainfo.net/docs/x_59233.pdf The World Factbook. North America: Canada (2009). Central Intelligence Agency. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/ca.html Read More