MGB104 International Business

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MGB104 International Business

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MGB104 International Business

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Course Code: MGB104
University: University Of Canberra

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Country: Australia

Question

Imagine you are a manager for Jinli, a Chinese mobile phone company. Jinli is famous for selling mobile phones with high performance and affordable price. The company was established in 2005 and ranked as top ten mobile phone sellers in domestic markets. Until now, it has expanded to countries such as India, Thailand and South Africa. The company’s management has decided that they would like to speed up their internationalization, and are looking to establish new operations in some developed countries and developing countries.
The company has identified three potential countries for market entry: Australia, Brazil and Vietnam. You have been asked by your manager to undertake a country potential analysis on ONE of these markets, and produce a report. Your report should include a detailed analysis of the selected country, and should identify the advantages and disadvantages for Jinli entering that market for retail, manufacture or both (You are about to make one of the following decisions: manufacture in China and sell to the selected country; or manufacture in the selected country and sell to China; or both manufacture and sell in the selected country).
The purpose of this assessment task is to demonstrate the ability to assess a market’s potential. You can choose any one of the three countries, and analyze the market potential for that country using the tools covered in the subject. As the focus is specifically on the mobile phone industry, your analysis of the country would need to be narrowed down to the sector. PLEASE NOTE: Jinli is a hypothetical company and therefore you do not need to search for any company-related information.
Some of the following tools/theories should be used to analyze the market:

PESTLE
Porter’s National Competitive Advantage Theory

Your recommendation should state whether the market is feasible for entry. This should follow logically from your analysis.

Answer
International Business
Introduction

In all around the world there are many new companies that have adopted internationalisation as their prime strategies for the growth of their business. In the process it is always essential that company understand the nature of the market as well as its potential to establish their market base in the new nation (Haverila, 2011). They had to face many types of challenges in the process like economic instability, competition etc. Mobile manufacturers have expanded their business at tremendous pace. Jinli is one another company that is known for making and selling of mobile phones of high performance at lowest of prices. In china they are the tenth largest seller. Apart from this they also have their markets in South Africa, Thailand and India. This company plans for its further expansion in Australia. This report analyses the capability of the company as well as the external environment that is present in Brazil so as to make expansion. It also explains about the advantages and disadvantages for Jinli if they enter into Australia.
Mobile phone market in Australia
Australia has been one of the best countries for the expansion of mobile phone producers. Australia being a developed nation provides a huge amount of opportunity for the new companies to expand into it. The number of mobile phone users in Australia is going to become approx. 3 billion by 2020 (Soo and Doolan, 2014). There are very less mobile phone manufacturing companies that are operational in Australia. 75% of Australian users are going to use smartphones by 2022, this act as a global attraction for companies like Jinli to invest. Major part of the market is captured by big competitors like Apple. But with the changing dynamics of the market, the people are also demanding for lower cost products with high performance.
Advantage and disadvantage for Jinli 
Jinli is a growing firm and hence in the process of Internationalisation, Australia can be an excellent market. This company aims to just sell its products in the country with the help of retailing business. This is because of the fact that Australia is a costly market especially for the process of establishing manufacturing units in the country. In order to gain high profits, retail is the best option (Paladino and Ng, 2013). There are certain advantages and disadvantages of entering into Australia. They are as follows:
Advantages   

Australia being an economically advanced country provides an effective market opportunity for the company to gain high profits.
The per capita income of the people within the country is also high hence there would be no problem for the company to expand their reach deep into the market.
New urban areas are getting developed in the Australia which will act as a market base for the Jinli. The number of people under such distinct base is increasing and is expected to increase more in the coming years (Goswami and Singh, 2016).
Australia is having a technologically advanced market having high number of people with technological knowledge. This kind of technological knowledge will help the firm in highlighting their features at the time of marketing.
It is also a neighbouring country to New Zealand which can also act as a new market base for the Jinli.
Limited presence of companies that provides mobile phones at lowest of rates in Australia can be an advantage for Jinli.
Effective supply chain management in Australia provides strength to retail which will help in increasing sale of the products (Ahmed, Qazi and Perji, 2011).
Easy trade routes and reducing import tax barriers in Australia provides an advantage for the new mobile manufacturers to come into the country.

Disadvantages

The cost of operations in Australia is huge hence the strategic planning of the company must be done at the basic level so that considerable profits can be generated (Khaddage, Lattemann. and Bray, 2011).
High per capita income allows people to buy premium products like Apple and hence it is a reason which Apple captures 55% of the Australian mobile phone market (Statista, 2018).
Highly competitive environment where large numbers of firms are present provides a very tough market condition for mobile companies to operate.
Poor performance of low price mobile manufacturers in the Australian market has been recorded.
Largely dependent on Asia for fulfilling the internal demands of the mobile phones.

Environment analysis
There is a huge change in the business environment in all around the world. This calls for companies to have long ranged analysis of various factors that are present in the global business environment (Klein and Jakopin, 2014). For doing this PESTLE tool is the most appropriate one.

Political: The political condition of Australia has not been so stable in the last few years. This can be understood by the fact that so many top leaders in the government has changed. This kind of instability had negative effect on the business policies in the recent years. The leadership approach towards the future of the industry has also been positive (Yang, Kurnia and Smith, 2011). The easing of trade routes and positive response towards investment within Australia has promoted the smaller companies to come into the nation. Government has been supporting the highly competitive environment within the nation which acts as a support for Jinli to enter into the sector.  
Economic: Australia is a highly stabilised economy and a developed nation which gives them an excellent market to expand their business. Higher per capita income gives the people with higher purchasing power. Such a purchasing power allows companies to increase their sale without actually putting an extra effort (Shaw, Brereton and Roe, 2014). China being a crucial trade partner of Australia gives Jinli with an excellent platform to provide support to their supply chain. Jinli needs to find local investors in the business so as to ensure proper investments can be made in different retail stores as well as in marketing activities.
Social: Society has changed and so is their demand. With the increasing demand of mobile phones that are of lower cost gives an opportunity to Jinli to enhance its sale. People also demand for high performance products and Jinli is capable of providing such services. The market segmentation and targeting must be done based on various variables. The ageing society is a matter of challenge for the new companies to stabilise their business. Use of retail stores will be able to attract larger numbers of customers towards their product. In this regards product diversification could be an effective strategy.
Technology: Australia is a technologically advanced nation hence Jinli could easily use these technologies in their various processes. Use of technologies in marketing can help Jinli in reaching deeper into the markets at the same time could also help in reducing the cost of marketing. Technological advancements should also be done in the products so as to provide better facilities than their competitors. The more the value that Jinli adds to their products more is the chance that they can gain competitive advantage in the market. Innovation can be an excellent way to do this.
Legal: The legalities within Australia have changed especially related to the ways in which operations are performed within the country. The consumer laws have strengthened and at the same time the laws related to doing ethical business needs to be followed so as to avoid any legal compliances (Lee, Tam and Chie, 2014).
Environment: The environmental challenges are bigger for every sector and hence Jinli needs to make sure that they have a plan for doing the sustainable business. They need to invest more on the transportation and packaging. The use of plastics must be avoided in the packaging so as to reduce the waste. The technology must also be built by Jinli checking the safety of the consumers because mobile technologies generates huge amount of pollution.

Porter’s National Competitive advantage theory
In order to understand Jinli’s feasibility in its business within Australia, Porter’s National Competitive Advantage theory could be used. This model aligns various factors in the business in a diamond shape. This model helps the company to understand the factors that provides competitive advantage to the company while they are doing their business in the nation.
Firm strategy, structure and rivalry
Jinli takes use of various strategies so as to improve their performance in different markets. The strategies that they utilise in the process are new product development and product differentiation. Along with this in the marketing process they have used strategies such as cost leadership and market segmentation (Goggin, 2012). Along with this they have used hierarchical structure at their organisation so as to improve the flow of information within the organisation. It also helps the company to distribute the roles to the individuals in an effective manner.
The rivalry in the sector is huge and there are large numbers of firm present in the industry that are capable of high customer retention (Chao, Reid and Mavondo, 2012). But the advantage with the Australia is that there are very less number of mobile companies present in the nation that is having the same nature as of Jinli.
Demand conditions
Technological demands in the country are increasing at much faster rate especially the mobile technologies. This has increased the sale of mobile phone. This is not only on the sides of individual customers but the companies are also taking use of this medium in their operations (Islam and Meade, 2012). There are many people who want mobile phones with high performance but at lower prices. This demand is going to increase in the coming years.
Related and supporting industries: There are many related and supporting industries that are operational in Australia. Mobile component’s manufacturing industry along with glass and plastics industry have emerged in various parts of Australia. Along with this the retail industry is also empowering the sales of products like mobile phones.
Factor condition
The factor conditions within Australia are of high standards and support the business operations of mobile phone makers. This can be understood by the fact that customers and employees both are highly educated. People in the nation are highly skilled which gives Jinli with an opportunity to add skills to their workforce and hence achieve increased productivity within the company. Human resource’s commitment is also high in Australia. Infrastructure of the Australia is also high tech hence gives an excellent opportunity for Jingli to open stores at various fronts. Deregulation of the labour market and the liquidity of the national stock market help various new companies to enter into the market (Drake, 2011).
Recommendations regarding the entry  
There are certain things that Jingli needs to take care about before entering into the Australian market. The first and the foremost thing that company needs to take care about is the fact that Australian socio-economic conditions support premium priced products with excellent features. In such an environment only the products that provide additional value to the customers can sustain (Jbdon, 2018). Company must also strengthen their demand and supply chain and must increase their bonds with suppliers so as to fulfil the demands of the customers as well as helps the company in effective utilisation of resources.
Australian market is highly feasible for the Jingli as their economy, political condition, technological environment; social orientation all supports the arrival of new company. Jingli needs to have an aggressive marketing campaign so as to reach to maximum numbers of customers in a minimum possible time. The use of geocentric approach in strategies can be beneficial for the company. The local people must be employed under the firm so as to resist the challenges that Jingli might face related to cultural barriers. Jinli must also focus on rural section of the country as it gets attracted towards low cost products with high performance.
Conclusion
From the above based report it can be concluded that Jingli one of the biggest mobile manufacturers of China. It is going to expand its business in Australia. It an excellent market for the company’s growth as the economic and political condition of the nation is highly stable. Technologically advanced societies having skilled and educated labourers give an excellent base for the company to open their retail stores. Company must also focus on the digital marketing campaigns along with geocentric strategies so as to reach deeper into the market. Supply chain needs to be strengthened so as to fulfil the local demands.
References
Ahmed, I., Qazi, T.F. and Perji, K.A., (2011) Mobile phone to youngsters: Necessity or addiction. African Journal of Business Management, 5(32), pp.12512-12519.
Chao, C.W., Reid, M. and Mavondo, F.T., (2012) Consumer innovativeness influence on really new product adoption. Australasian Marketing Journal (AMJ), 20(3), pp.211-217.
Drake, F., (2011) Protesting mobile phone masts: risk, neoliberalism, and governmentality. Science, Technology, & Human Values, 36(4), pp.522-548.
Goggin, G., (2012) Cell phone culture: Mobile technology in everyday life. Routledge.
Goswami, V. and Singh, D.R., (2016) Impact of mobile phone addiction on adolescent’s life: A literature review. Int J Home Sci, 2(1), pp.69-74.
Haverila, M., (2011) Mobile phone feature preferences, customer satisfaction and repurchase intent among male users. Australasian Marketing Journal (AMJ), 19(4), pp.238-246.
Islam, T. and Meade, N., (2012) The impact of competition, and economic globalization on the multinational diffusion of 3G mobile phones. Technological Forecasting and Social Change, 79(5), pp.843-850.
Jbdon, (2018) Porter’s Diamond – Determining Factors of National Advantage. [Online]. Available at: https://www.jbdon.com/porters-national-competitive-advantage-model.html. [Accessed on 31st August 2018]
Khaddage, F., Lattemann, C. and Bray, E., (2011, March) Mobile apps integration for teaching and learning.(Are Teachers Ready to Re-blend?). In Society for Information Technology & Teacher Education International Conference(pp. 2545-2552). Association for the Advancement of Computing in Education (AACE).
Klein, A. and Jakopin, N., (2014) Consumers’ willingness-to-pay for mobile telecommunication service bundles. Telematics and Informatics, 31(3), pp.410-421.
Lee, S., Tam, C.L. and Chie, Q.T., (2014) Mobile phone usage preferences: The contributing factors of personality, social anxiety and loneliness. Social Indicators Research, 118(3), pp.1205-1228.
Paladino, A. and Ng, S., (2013) An examination of the influences on ‘green’mobile phone purchases among young business students: an empirical analysis. Environmental Education Research, 19(1), pp.118-145.
Shaw, G., Brereton, M. and Roe, P., (2014, December) Mobile phone use in Australian indigenous communities: future pathways for HCI4D. In Proceedings of the 26th Australian Computer-Human Interaction Conference on Designing Futures: the Future of Design (pp. 480-483). ACM.
Soo, V.K. and Doolan, M., (2014) Recycling mobile phone impact on life cycle assessment. Procedia CIRP, 15, pp.263-271.
Statista, (2018) Smartphone market in Australia – Statistics & Facts. [Online]. Available at: https://www.statista.com/topics/4605/smartphone-market-in-australia/. [Accessed on 31st August 2018]
Yang, S., Kurnia, S. and Smith, S.P., (2011, January) The impact of mobile phone use on individual social capital. In 2011 44th Hawaii International Conference on System Sciences (HICSS 2011) (pp. 1-10). IEEE.

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