International Business Essay
1. 0 Introduction In assuming the position of a marketing manager for a local chain restaurant that is successfully operating 32 restaurants in Malaysia, that has the theme is “Chicken Rice”, a number of matters are looked at and examined in regards to the process of internationalization of the firm into the global market, which is always a challenging and exciting exercise. This would not be a very simple task and will be one that needs a considerable amount of investment to successfully materialize.
Concerning this main report, all the important decisions and strategies in relation to the firms internationalization process will be the main subject of discussion. The CEO of the business want to slowly expand into foreign and her idea is to seek a strategic partnership with a host via strategic alliance and the CEO wants a stake in the foreign operation so as to maintain greater control to maintain consistency. Further it being the first venture overseas it is the opinion of the CEO that a direct involvement in the venture would be in the best interest of the business.
Acting on this instruction, as a marketing manager, I would identify 2 potential country’s for the internationalization exercise and
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The appropriate management structure for the business in the host country will be discussed. In addition, the food industry in the selected market will be examined and an international marketing plan will be made. 2. 0 Country Analysis This report first commences with an analysis of two countries that have the potential for market expansion within the region and these countries will be Qatar and the United Arab Emirates. These nations will be analysed to determine which of these is more suitable and appropriate for international expansion. 2. 1 PEST Analysis for Two Countries
To examine the most important areas of the environment that could impact the performance of company, the PEST analysis will be used as it is a very feasible and flexible tool that is simple to use and is capable of being used by this business for the purposes of strategic planning. What is apparent is that the real value relating to the usage of the PEST analysis is dependent on how it is utilized (Pest Analysis, 2009) By using this tool, the restaurant is able to find important information and strategic planning data that can be used to make a business decision, which in this case would concern determining which country to enter.
The data that can be obtained through this analysis would be political, economical, socio-cultural and technological information (Pest Analysis, 2009) 2. 1. 1 Political Analysis Political issues would have to do with the legislation that are persisting, the types of laws that government, taxation laws and also the regulations relating to the transfer of capital and also labour. For both countries, the political system is democratic and hence very stable. The governments of both countries have implemented the use of very friendly and acceptable policies that govern international business and it does promote the entry of foreign business.
Of the two countries, the Emirates would have better political stability, better governmental regulations and it is practices is more open door policy (UEA Setting Up A Business, 2009). 2. 1. 2 Economic Analysis For the economic analysis of both countries, what is apparent is that the economy of Qatar is quite strong and one of the most formidable in the region but it is clear that the Emirates has a much higher and stronger economic growth when compared with Qatar. The level of unemployment is lower in UAE and also low in Qatar (UAE Interact – Political System, 2009) and (UAE Business Law, 2009).
With the efficient and friendly government policies in UAE, resources are plentiful, and these include Human Resources, financial resources and also other resources that are needed to start a business (Dubai Chronicle -Pillar of Economic Stability, 2009). Qatar also has friendly open door policies for foreign businesses (Invest Qatar, 2009) and (Qatar Business Scene, 2009). 2. 1. 3 Socio Culture Analysis When assessed from the perspective of wage earnings, what is observed is that Qatar and the UAE both have very high income earners and a growing population, with a high migration rate especially in the UAE.
The level of education is high in both nations. In UAE especially, the residents show a preference for eating out and dining at fine eateries and restaurants. This trend is not so prevalent in Qatar whose residents do not exhibit an eating out culture and do not have a great liking for fast food, like what the restaurant is known for. 2. 1. 4 Technological Analysis Matters concerning the level of technology in Qatar and UAE concern the type and level of relevant technology that is made available by both these countries to make it easier for a business like this to operate.
In terms of technology, UAE is found to have a higher amount of technology that is available and this includes technology relating to construction, technology relating to food processing and production and information communication technology also, that is typically used in the most important parts of business operations. 3. 0 The Country Selected The facts that have been presented above do demonstrate that both the UAE and also Qatar are very attractive countries that this restaurant business will be able to expand into for the purpose of achieving business growth.
However, through an examination of the data contained in the PEST analysis of the UAE and Qatari business environment above, it is quite apparent that UEA does have more advantage. Firstly, UAE has a very good open door policy that international firms find to be very appealing and draws many to invest in UAE. Event though the Qatari government does have friendly policies and acceptable regulations, UEA has more attractive ones and are more beneficial to the business in the long term.
UAE also have a very strong economic policy that is meant to sustain long term growth and economic viability and this is yet another reason why a business would want to select UAE for establishing their business. Next, the huge number of expatriates in UAE together with their constant lack of time to prepare meals at home, would be an excellent socio culture trend that this restaurant business can use to its advantage. It is due to these reasons that UAE is the primary selection for this restaurant business to enter.
The business will select the city of Dubai to commence its business in the beginning. 4. 0 Mode of Entry and Justification for Selected Mode Selecting the correct strategy for global expansion is a prerequisite to success in the international market. The choice of the appropriate strategy could very much ensure that the organisation is able to enter into the foreign market with a minimal amount of problems and to be able to establish itself fast and to achieve success very easily, without much obstacles that might be encountered by the use of a wrong strategy for international market entry.
For entry to this market, there are many strategies that the restaurant business could use but the most positive and beneficial strategy that is capable of being used is the joint venture strategy, which has been seen as the easiest way for a company like this to be able to achieve a strategic alliance with another company, to facilitate market entry.
This strategy for international market entry is very beneficial and highly justified as it is capable of ensuring good political connections with the local government, it would give access to distribution channel, depending on the relationship it has with its partner (Market Entry Strategy – Joint Venture Strategy, 2009). By the use of this strategy for international expansion, this restaurant business and its partner would be able to adopt each others strategic goals which will converge and their competitive goals will effectively diverge (Market Entry Strategy – Joint Venture Strategy, 2009).
Additionally, the restaurant business is able to take advantage and benefit of the size, the market power, as well as the resources of the partner, as compared to the leaders within the industry. Next, the restaurant business is able to learn its other partner about the industry, it can learn about seasonal changes in trends and it can learn many things about the UAE food industry from its partner which will then enable it to compete by itself once it starts its franchise mode of business in UAE and becomes independent.
Most of all, the restaurant is able to learn about pricing within the UAE food market, it is able to acquire technology from its partner and learn about everything it needs to know about rules and regulations that have been set by the Emirati government (Market Entry Strategy – Joint Venture Strategy, 2009). 5. 0 Selection of Partner Making a selection of the correct and suitable partner is very important for a successful venture and for this joint venture the partner that has been selected will be the Al-Marwai Restaurant & Club, which is in the main business district in Dubai.
This restaurant is very famous and caters for a large amount of customers from the surrounding area. The restaurant specializes in service Arabic food exclusively. This restaurant as selected primarily because of its vast knowledge and experience of the industry and its popularity amount the residents of Dubai. 6. 0 The Internal and External SWOT Analysis This part of this report examined the what this organisation is strong at doing, what it is weak at doing, what opportunities that it has for it to use and what threats that it might experience.
The most appropriate analytical tool that is to be used here will be the Swot tool which will provide the required information about the strengths, weaknesses, opportunities and threats being faced by the restaurant. By using this tool, the business would be able to determine what are the opportunities present which the business can exploit for its benefit (Mind Tools – The Swot Analysis Tool for Analyzing Business Performance, 2009)/ 6. 1 Strengths Strengths Analysis 1. Advantages that this organisation have? 2. What are its strong points?
3. What are the factors which help it get the sale that it wants? (Mind Tools – The Swot Analysis Tool for Analyzing Business Performance, 2009) Through having consideration of this via an internal perspective, it is quit apparent that the main strength of this organisation lies in the ability of the organisation to win a large market share through a offering a combination of food of high quality, efficient service and effective management that constantly emphasizes the importance of quality of all organisational operations.
This is something that the competitors in the industry are not able to achieve. The most important strength is perhaps the fact that the organisation does have a very high quality process of production of food made possible through the use of the available technology. Externally, the organisation has a very strong reputation, especially among the expatriate crowd and its brand name is famous all over UAE and the Arabic Gulf. 6. 2 Weaknesses The Weaknesses analysis: 1. What the organisation can improve on ? 2. What the organisation needs to avoid? 3. What factors makes the organisation lose its sales?
(Mind Tools – The Swot Analysis Tool for Analyzing Business Performance, 2009) The main weakness faced by this organisation is the fact that it does not offer food from other parts of the world but Arabic food only. Among the local and expatriate crowd that it serves, these people tend to like to try food from other regions and cultures and not just Arabic food all the time as they are liked to get bored of the same food and would change to a competitor, hence causing it to lose customers. There is no harm with having more diverse food items offered on its menu.