Framework for Marketing Planning - Case Study Example

Market Entry Proposal  Introduction. When a company has decided to enter into an international market, there are several options available to it. These alternatives vary depending on risks, costs, and the extent of control that can be put over them. One of the simplest way of entering into foreign markets is through direct or indirect exporting method for instance using agents for the case of indirect and using countertrade as in the case of direct export (Anderson, 2005). More complicated forms may include truly foreign operations which involve joint ventures, or export processing zones. After making a decision on the form of entry strategy to be adopted in reaching global markets, particular channels have to be chosen. Several agricultural products of commodity or raw nature use distributors, agents or governments, while finished materials, without excluding these, heavily rely on more advanced forms of access. Background The proposal begins by looking at the analysis of market opportunities in Taiwan, Company situation analysis and it goes on to describe various forms of market entry strategy to be adopted. Both indirect and direct exporting strategy and their advantages will be explored. The proposal outlines specific details concerning countertrade, which is common in international marketing, and concludes by taking into account step-by-step approach to be used in implementing proposed strategy in line with the strategic objectives of the company Market Opportunities in Taiwan Taiwan has been one of the growing countries in Asia with its island population of 23 million living in an area size of Canterbury. The country has a density of about 640 people living in a square kilometer, a growth higher than that of Korea and Japan. As a result of land limitations, Taiwan has a relatively smaller agricultural sector but has other niche capabilities in horticulture, pork and aquaculture (Deresky, 2008). Taiwan’s economy is currently 26th growing country in the world. Although it has few natural resources, fast aging population and low birth rate, it is looking for external growth and prosperity. Even though the country has been isolated diplomatically, Taiwan has been an important market for ICT and supply chains locally and internationally. China, which is the Taiwan’s largest trading partner is critical in this. Since the opening up of China in 1970’s, Taiwan has been investing in the country and vice versa. This has led to commercial and trade integration across various industries, especially movement of factors of production from China to Taiwan has enhanced the growth of businesses. Today, Taiwan is regarded as an economy and a market to watch, and as part of economy of wider Chinese economy where Taiwanese channels offers a lot of opportunities for entry and growth of the market. ICT industry in Taiwan is global and has a strong research and development capability and established pipelines. There are many opportunities for the telecommunication sector for foreign companies. Political climate is favorable for investments since the re-election of Ma for a second term. Relationship between China and Taiwan has been good and has begun dialogue on political issues that can nurture good relationship between the two countries. Company Situation Analysis Situation analysis is the foundation of a marketing plan. It includes extensive analysis of internal and external factors that affect the business. It provides a summary of the organization thus leading to a clear understanding of the factors that might affect the future performance of the company Situation analysis covers both micro-environmental factors affecting several firms within a certain business environment and micro-environmental factors that affect a specific firm. The reason for carrying out a situation analysis is to show a company the product and the organizational position, together with the overall business survival within a given environment. It is paramount for the companies to analyze problems and opportunities within a given environment so as to ascertain their capabilities within a given market (Charles Hill, 2012). Internal analysis It involves a thorough knowledge and understanding of the organizations strengths and weaknesses. These issues are seen in company’s image and culture, staff, organizational structure, operational capacity and culture, financial resources, and brand awareness. Strengths include positive attributes which can be tangible or intangible and the organization have control over it. Weaknesses are those factors that deter a company from achieving its goals and objectives. External analysis Opportunities and threats are regarded as part of external analysis. Both occurs when things happening in the external environment causes some changes to the company’s business operations. External environmental changes can be attributed but not restricted to suppliers, market trends, partners, suppliers, new technology, competitors and economic environment. Opportunities are seen as factors that can positively propel or influence the organization in some ways. Threats are factors that create some risk situations in an organization and may hindrances towards the achievement of organizational goals and objectives (Keegan, 1998). Methods of situation analysis There are various methods used to analyze the situational analysis of the company. Some of the methods include SWOT, the 5C’s and Porter’s five forces analysis. SWOT analysis It is a method that can be used to examine the company’s strengths and weaknesses (internal environment) as well as opportunities and threats that may be in existence, in a given market (external environment). SWOT analysis looks at the present and future situations, where there is an analysis of current strengths and weaknesses with the future consideration of opportunities and strengths. This aims at building as much as possible on the strengths while minimizing the weaknesses. A threat in the future can be a potential point of weakness while an opportunity in the future can be taken as a potential strength. It is important to note that this SWOT analysis can help the company in designing a plan that provides measures to be taken during the time when the company is undergoing potential scenarios (Keegan, 1998). 5Cs Analysis Company Carrying out the company analysis allows for evaluation of the objectives, capabilities and strategies of the company which shows the strength of the business model, if some areas need to be improved, and how the company will align itself into the external environment. Competitors Analyzing the competitors takes into account the competitor’s position the industry in which it operates and the threat it may have towards other businesses. The main aim of carrying out competitor analysis is to aid the company in analyzing the present and the potential capabilities and the nature of a competitor so as to be prepared for competition against them (Courtney, 2002). Competitor analysis should consider the following criteria: competitor identification, competitor assessment, and future initiative of the competitors. Market analyst is responsible for examining the marketing and financial performance of the company. It comprises the strengths and weaknesses, the intended response to the marketing strategy of the company, growth analysis as well as investment plans Customers Customer analysis can be broad and complicated. Several companies conducts PEST analysis which scans the external environment of the company. Some of the key areas to analyze includes: Size of the market and growth potential Customer needs and wants Demographics Suitable adverts to the customers Motivation to purchase the product Channels of distribution (retail, wholesale, online) Customer’s level of income Collaborators Collaborators are very important for the company since they enhance the creation of ideas together with increasing the probability of acquiring more business opportunities. Types of collaborators include suppliers, agencies, partnerships and distributors. The company should identify whether the collaborator has the ability needed in running the business together with the level of commitment required for the relationship between a collaborator and the business (Deresky, 2008). Climate In order to understand the business climate, there are various factors affecting business, and if fully researched it can make the company respond positively to change. Climate analysis is also regarded as PEST analysis. The types of climates that an organization has to analyze include: Political and regulatory, Economic, Social and cultural, Technological and Legislative environments (PESTEL) Porter’s five forces It is a framework for business and industry analysis and can be used to develop a strategy. This model is used to scan and identify the competitors in order to carry out qualitative evaluation and identify the strategic position of the firm (Porter, 2002). The main purpose of this model is to assist the company and make analysis on the position and profitability at the line of business, instead of industry sector or industry group level. The following factors are put into consideration: Threats of new entrants Markets that earns a lot of profits will attract new entrants into the market. This will lead to entrants of many firms which will eventually decrease the profits being earned by all firms in the industry. Unless new entrants are being blocked from entering into the market, the existing firms will only earn normal profits. Bargaining power of the buyers This involves the ability of the buyers to influence price decisions in the market. They put a lot of pressure on the company which will make them come up with loyalty programs so as to reduce their buying power The bargaining power of the suppliers Suppliers of components, raw materials, labor and services i.e. expertise to the company can source of power over the company especially when there are few or no substitutes. Suppliers may decline to work with the firm, or may charge high prices for distinct resources. Threat of substitutes The presence of products outside the realm of the ordinary product boundary raises the tendency of buyers to switch to other options. For instance, there is a substitute of the traditional phone with VoIP phone Rivals among the competitors For many industries, the power of competitive rivalry determines the competitiveness of the industry. Several companies compete to dominate in the market so as to remain relevant and maximize the profits Readiness for international market After doing the situational and internal analysis, the company should carry out market assessment of Taiwan so as to determine the entry strategy. The best market entry strategy has to be identified and restructure the business activities through internationalization as it anticipates to penetrate into the market (Keegan, 1998). Before making any foreign entry strategy, the following issues have to be considered: When should the firm enter into the international market? Other essential factors include: size of the company, level of experience in international trade Also, the bigger picture of products and services. Issues of entry mode, knowledge of the market several attractiveness of economic variables, etc. Market entry strategies According to Keegan (1998), there are several market entry strategies that a firm can adopt so as to enter into foreign markets. Some of the common strategies include: Exporting It involves marketing of goods and services produced in one country and taken into another. It is one of the most traditional and a well-recognized form of penetrating into foreign markets. Exporting method include indirect and direct export. In indirect export method, a firm may decide to use a distributor — an agent, or overseas subsidiary — or use government agency. Foreign production Apart from exporting strategy, some other market entry strategies include the following: Licensing This is a kind of method where a firm in one country permits another firm in a foreign country to use their trademark, know-how, processing, manufacturing or some other skills offered by the licensor. It involves little involvement and expense. Some of the advantages of this entry strategy include: it is one of the best ways of starting international operations and provides an opportunity to reduce risk manufacturing relationships. There is also an option to purchase into a partner or a chance to take royalties in stock. Nevertheless, licensing requires enough planning, fact finding, investigation and interpretation Joint ventures A joint venture is an enterprise where more than two investors share control and ownership over operation and property rights. They are wider form of participation than either licensing or exporting. The advantages of a joint venture include sharing of capital contribution, source of supply for a third country and knowledge, know-how technology and risks are shared with a foreign partner. On the contrary, either of the partners may not have powers to take full control of the management. Partners may have divergent views on the expected benefits and it also becomes difficult to recover capital contributed if need be. Wholly ownership This involves taking 100% ownerships of a subsidiary company by purchasing more shares of the company and involves huge capital investments and managerial effort. After analyzing all the market entry strategies, export strategy is recommended since it is very lucrative. It does not require any manufacturing establishment in a foreign country. The task of the company is only to identify a market, find an agent or a representative, set up documentation and physical distribution, promote and price the product. Strengths of exportation i. The manufacturing processes is done at home country, therefore, it becomes less risky as compared to overseas based manufacturing. ii. The company is in a position to learn first the dynamics of the foreign markets before making any investment decision. iii. Potential risks of operating in foreign trade is reduced. iv. When it comes to indirect exportation, commission given to agents and distributors acts as a source of motivation to sell more of the company’s products. Weaknesses of exporting entry strategy One of the weaknesses of this entry strategy is the lack of control of the overseas agents. Lack of control leads to leaving pricing, promotion and certification decisions on the hands of others. Strategy implementation Having analyzed various entry strategies into foreign markets, the following steps should be taken in implementing the chosen strategy Develop clear understanding about the market dynamics e.g. drivers of technology that may cause market shift, market size, government policies and competitive profile of the market. The second component is company’s situation analysis (SWOT analysis). Analyze the external environment through PESTEL model (Cole, 2003). After the completion of both internal and external analysis, actual implementation of the chosen strategy should be implemented. The most important element is the timing of the implementation of the strategy. The final stage is to do the valuation of the chosen entry strategy against the company’s objectives. This assists in analyzing whether the objectives of the company has been achieved. References Anderson, G., 2005. Framework for marketing planning. Michigan Business school.. Charles Hill, G. J., 2012. Strategic Management Theory: An Integrated Approach. New York: Cengage Learning. Cole, G. A., 2003. Strategic Management. s.l.:Cengage Learning EMEA. Courtney, R., 2002. Strategic Management for Voluntary Nonprofit Organizations. Northern Ireland: Psychology Press. Deresky, H., 2008. International management. New Jersey, USA: Pearson. Keegan, W., 1998. Global Marketing Management. s.l.:Prentice Hall International Editions,. Kerkhoff, G., 2006. Global Sourcing: Opportunities for the Future. Wiley-VCH: Weinheim Düsseldorf. Martin, T. &., 2009. Strategic Management and Practice. London: Sage. Porter, M., 2002. The Five Competitive Forces That Shape Strategy. The Harvard Business Review, pp. 234-236. Read More