The 2018 BCG Global Challengers Report (https://www.bcg.com/Images/BCG-Digital-Leapfrogs-May-2018-revised_tcm9-195110.pdf) identifies 100 rapidly globalizing companies from 23 emerging markets who are growing faster than their counterparts in mature markets while capturing a growing global market share.
Referring to the 2018 BCG Report, select one of the Global Challengers. You may choose the company for various reasons:
- they could be based in a country that you are familiar with
- they could be a player in - or potential threat to - your own industry
- they could be a company that you are familiar with as a customer
- they could be a company that you have a personal interest in learning more about.
Once you have selected one of the 100 Global Challengers, produce a report that addresses the 5 following tasks:
Research the company and provide a summary of:
- a) the company’s core business and the industry to which it belongs (suggestion - 1/2 page)
- b) the company’s position in its domestic market (suggestion - 1/2 page)
- c) the other countries in which the company currently operates: this could be presented in a table (for your own reference, try to identify the year in which the company entered each country and through which mode of entry e.g. acquisition, joint venture etcetera) (suggestion – 1/2 page)
- d) you must then identify and explain the general criteria that you believe were used by the company to select these countries to expand into (suggestion – 1.5 pages)
- Worth 20% of the overall mark
- Not included in the word count
- This background analysis must be included as an appendixand must be no more than 3 pages in length
Using the company’s country selection criteria as identified in Task 1c, identify a country that the company does not currently operate in but which you think may be attractive for the company to expand into imminently.
Once you have selected a country, undertake a PESTEL analysis of the country’s macro-environmental factors that you believe to be of most relevance to the company – whether in terms of opportunities or threats – and explicitly discuss the implications of these macro-environmental factors for the company.
As an initial starting point for data collection for this task you may wish to consult the latest version of the World Economic Forum’s Global Competitiveness Report.
- Worth 20% of the overall mark
- 750 words
- This task must be presented in the 1stsection of the main body of your report
Apply the 5-Forces model to critically analyse the competitive intensity of the industrial environment of the company in your chosen country market. A SWOT analysis is not acceptable.
- Worth 20% of the overall mark
- 750 words
- This task must be presented in the 2ndsection of the main body of your report.
Analyse the firm’s internal environment in order to EITHER:
- i) critically evaluate the resources and capabilities of the companyand the competitive implications of these for the company when entering into your chosen country market (this will require an application of the VRIO framework)
- ii) identify the company’s internal value-adding activities and critically evaluate which of these will be most relevant in supporting the company to enter into your chosen country market (this will require an application of the Value Chain model).
A SWOT analysis for either option is not acceptable.
- Worth 20% of the overall mark
- 750 words
- This task must be presented in the 3rdsection of the main body of your report.
Critically evaluate the relevant modes of entry available to the company and recommend – with justification based on the findings of your analyses in Tasks 2, 3 & 4 above – the most suitable mode of entry that will enable this strategic international expansion to be a success for the company.
- Worth 20% of the overall mark
- 750 words
This task must be presented in the final section of the main body of your report; this will be your conclusion to the report.
Task 1: Organisation core business and summary
International business strategy is a tactic to operate and plan the business in the different countries. It is a plans and actions of private corporations rather than government agencies. It is a procedure of trading of goods and services, technology, capital and knowledge at global level. It is also known as globalisation under which organisation engages with other countries. While company operates its business at international level then it must consider various factors that may affect business activities and function such as political, technological, legal, social, cultural etc. The present report is based on the strategies and approaches to enter in the new market and operates business at global level. Porter Five force model and Pestle model has been also discussed in this report with respect of Oppo Electronics Corporation. It is a Chinese consumer electronic and mobile communication corporation which serves electronic devices. The main purpose of this report is to understand the criteria to operate business at global level and successfully enter in the new market.
Oppo Electronics Corporation is also known as the Oppo which is the Chinese consumer electronic and mobile communication company. It is leading manufacturer of smartphones and it is a top smartphone brand in the china market. Basically it operates its business in the consumer electronics and it deals with Hi-Fi, home theatre, Auto visual, smartphones, ear phones, Speakers etc. In the 2001, Oppo brand name was registered in the China and launched in 2004.Oppo Company was become one of the biggest smartphone producer and maker in China in June 2016 and it is currently selling its phones in more than 200000 retail outlets. Its main mission is to provide extraordinary service and deliver advance technology to its customers. It desires to become healthier and sustainable enterprise by deliver high quality of product and services to its customers in the market (Chor and Manova, 2012).
For sustain in the international market and become successful in the international level, organisation must have to consider international business environment. Business environment is consist with various internal and external factors that affect business activities and functions in direct and indirect manner. Before enter into the new country, corporation should analyse and assess the international market in effective manner (Chow and et.al.,2012). In the context of Oppo electronic company, it is going to enter in the United Kingdome market. Oppo Corporation desires to expand its business in the UK market. For successfully sustain and operates it business in the UK market, it has to analyse business environment of United Kingdom. There are various macro environmental factors that can affect Oppo Corporation in the UK market. The several opportunities, threats and positive impact of macro environmental factors are discussed in below manner-
Political factor- United Kingdom is one of the most powerful countries in the world which have great political stability. However, due to brexit, several uncertainties and political debates have been occurred. Political factor of UK will affect Oppo Company in large manner as it includes several governmental policies, taxation rates, regulation, norms and rules that imposed by UK government (Botha, Kourie and Snyman, 2014). Oppo have to follow these rules and policies of government for operate its business in UK market. The government has set corporation tax rate for company profits is 9% so Oppo must have to pay tax accordingly. Furthermore, by political stability and regulation, Oppo will keep safe and secure its business activities, product and services in the UK market that is biggest opportunity for company. UK government split into national and local administrations that are the biggest opportunity for Oppo Company.
Task: Description of macro environmental factors
Economic factor- This factor is directly related to country economic condition like inflation, recession, interest rate and so on. For enter and sustain in the UK market, Oppo company must consider the economic condition of UK (Zhang and Huang, 2012). Product pricing strategy, level of revenue and profitability will directly influence by this component. UK has 5th highest GDP in the world and it has diversified economy with both large public and private sector. This thing will create benefit for Oppo Company in the UK market.
Social and cultural factor- This factor considers customers cultural background, region, languages, life style, standard etc that directly reflects their choice, perception and requirement of customer regarding product and services. United Kingdom’s people have high standard living and there are many free public services so these things should consider Oppo phone. The country open to migration leading to a cosmopolitan environment with around 1 in every 8 residents born abroad that result in a large, cheap labour (Cai and Yang, 2014). In order to sustain in the UK environment, Oppo should consider choice, taste and preferences of UK people by deliver product and services to them accordingly.
Technological factor- This is major factor that will affect Oppo company in the United Kingdom market. UK has high quality and innovation skill people and expertise in science and IT that will support company in improving its business performance and productivity. Furthermore, there is effective laws with regard to intellectual property through which Oppo can keep secure its intellectual property from threat and danger (Pestle Analysis, 2018). However, due to slow technological development in the comparison to United State, some procedure of business can negatively influence. Oppo must have to consider technological environment before enter in the UK market so as it will able to smooth running its business.
Environmental factor- This factor considers environmental conditions within country such as weather, climate, natural resources, water air etc that will directly affect production and manufacturing procedure of organisation.Uk sometimes faces challenges regarding weather conditions. Oppo Company should assess and analyse environmental condition of UK so as it can smoothly carry out its activities and function in UK market (TEbert and et.al., 2014).
Legal factor- This factor keeps protects the organisation’s product, services and whole business. United Kingdome have effective legislation, rules and laws regarding customers, people, business unit, production, employees etc that will have to follow by Oppo company while it enter in the UK market. The employment act 1996 will help to Oppo company employees to protect their rights and precise. The equality act 2010 protects employees from any discrimination. With help of various laws and legislation, Oppo Company can keep protect its business, employees and customer.
In order to sustain and survive in the competitive business environment, it is very important for corporation to analyse its competency and strength. With help of industrial environment analysis, organisation can easily assess its own competency in the market. As Oppo is going to enter in the UK market so in order to analyse its sustainability in this new market, firm needed to analyse competency (Waithaka and Ngugi, 2013). With help of Porter Five Force model, Oppo can easily analyse the competitive intensity in the UK market-
Threat from competitors- Electronic and Smartphone industry is one of the competitive market in the UK because there are various competitors who serves several high quality of electronic product to its customers (Grigor'ev and Suslova, 2014). Threat from competitor for Oppo Company in the United Kingdom is high because there are large numbers of rivals in the market. In order to face this competition and sustain within competitive business environment, corporation should design such impressive strategy and tactics through which Oppo can distinguish its product and services from its rivals.
Bargaining power of buyer- In the United kingdom, there are large numbers of smart phone producers and area of electronic industry is very strong. Customers have lots of options for buy mobile from other organisation. If Oppo Company makes changes in the price and features of the mobile then customer have lots of options to switch toward other brand in the market. Hence it can be said that in the United Kingdom, bargaining power of the customer is low for Oppo electronic company.
Bargaining power of suppliers- As Oppo produces and delivers high quality of product and services in the market. Its brand image is strong due to its high level quality of product and services. Oppo have much selected suppliers who provides high quality of raw materials to company and it build up a strong supply chain that is one of the backbone to Oppo company. While Oppo was new then supplier bargaining power was too high in other countries but now it have built strong relationship with supplier due to which bargaining power of supplier is very moderate.
Threat from substitutes- In the United kingdom there are lots of substitutes for Smartphones present in the market. However, it is fact that no other business unit can replace the smart phone, tablet and other electronic device of Oppo company because it have its own unique features and purpose which no other can replace. Hence, it can be said that there are large numbers of other competitors of Opp Company but its substitute is very low (Manova, 2013).
Threats from new entrants- Oppo is well established and reputed organisation in the competitive market so it is quite impossible for new firm to develop strong position in the market as Oppo have. For enter in the market and develop strong position, new start up business unit requires huge capital and at initial level new start up cannot invest large amount of capital. Hence, it can be said that threat from new entrants is very low for Oppo Company because it have very strong brand image in the 21 countries.
Value chain analysis is the strategic technique that is used for analyses and assesses the internal activities, strength and capability of firm. With help of this approach, management can identify that which activity is most valuable and suitable. As Oppo company is going to enter in the United Kingdom market so in order to sustain and get success in new market, Oppo needed to focus on its internal capabilities and activities (Carvalho, Marques and Berg, 2012). With help of Value chain model, Oppo internal capabilities and activities can easily identify. By determine internal activities, management can develop competitive advantage for business unit.
Inbound Logistics- Oppo Company has its own numbers of logistics firms as its subsidiaries. Its logistic system and approaches is very strong as compare to other competitors in the market. The majority of Oppo suppliers are based in Asia and it have 79.4% of its supply chain expenses in the Asia. Thus, it can be said that with help of its strong logistic management, corporation can easily sustain and survive in the United Kingdom.
Operations- Oppo company works at international level as it operates its business in 21 countries. As per the research it has been found that corporation produces more than 90% of products in house. Its operations divide into three divisions such as device solutions, consumer electronics and mobile communications. It maintains various worldwide operation hubs such as subsidiaries, sales, design centers, manufacturing subsidiaries etc (Batlle, Pérez-Arriaga and Zambrano-Barragán, 2012). Hence it can be said that Oppo have strong operation in the market through which it will successful carry out its business activities and function in the United Kingdom market.
Outbound Logistics- Oppo have effective outbound logistics system that plays a very crucial role in the electronic industry. Oppo electronic logistic conducts the comprehensive range of logistics operations through which it has able to create its value in the market (Value chain Model, 2018). In addition to this, effective integration of information and communication technologies into outbound logistics practice is one of the major sources of value creation for Oppo electronics. As it has been assessed that Oppo have excellent outbound logistic through which it can easily create impressive position in the new market and become successful to operate its business.
Marketing and Sales- Oppo Company have skilled and talented workforce who continuously contributing effective efforts and contribution in the business unit for address its objective. It effectively performs in marketing area as it has impressive strategy and tactics of sale and promotes its product and services. As per the research it has been found that Oppo marketing budget in 2015 is USD 10.2 billion. It spent budget in print media, social media, public relation program and events. Thus, it can be said that while Oppo Company enter in the new market that is UK then its marketing and sales activity will help in promoting and advertising its product and services in the market.
Service- Oppo have main aim is to deliver high quality and featured product and services to its customer as compare to other competitors and make customer satisfy (Netzer and et.al., 2012). For address this purpose, company produces high quality of product and services and maintain healthy relationship with client in market. Oppo also conducts customer survey for identify their requirement and perception regarding existing product and services and deliver high level of customer satisfaction (Soto-Acosta, Popa and Palacios-Marqués, 2016). Hence, it can be said that Oppo have excellent quality and featured services according to customer requirement and it provides quick solution to customer according to their queries. In the new market, Oppo will defiantly get success with help of its high quality services.
Firm Infrastructure- By use of good infrastructure and resources, Oppo will effectively carry out its operation and deliver impressive services to its customers in the UK.
Human resource- Oppo have good source of workforce through which it effectively carry out its business activities and functions. It have high skilled workforce that will help in improving business productivity and performance (Meyer and Thein, 2014).
Technology development- Oppo is using excellent t quality of technology that helps in improving performance of business. With help of high advanced technology, it will produce quality and featured product in the new market.
Procurement- Oppo has excellent level of procurement through which it has maintain high standard of business. In the UK market, it will use high standard procurement so as it can easily get success.
In order to enter in the new market, corporation must have to consider some specific market entry strategy. It is the planned method of delivering good and services in the new target market and distributing in the market. There are various ways to enter into the new market but it is very important to select one of the most effective method and approach because it directly influences sustainability of business in the new market (Lee and Saez, 2012). There are various kinds of market entry strategies such as direct exporting, Licensing, franchising, partnering, joint venture, buying a corporation, Turkey projects etc. As Oppo company is going to enter in the United Kingdom market so it is very essential for firm to effectively analyse and assess business environment. In addition to this, it is also very essential to select one appropriate strategy for enter into new market because it affects the overall performance and productivity of business. As per the business environment and organisation capability, firm will select one entry mode. Following are description of various market entry modes-
Direct Exporting- This is one of the simplest method of enter into the foreign market. In this aspect, corporation can directly sell product to the market by help of agents, distributers, brokers etc. These people are the branch between organisation and store where firm’s product will go to sell (Lakka and et.al., 2013). They are face of the company who represent company image in the new market. It is very important for organisation to select effective and talented agent who can easily handle distribution work in foreign country.
Licensing- It is one of the sophisticated arrangement where a company transfers the rights to use the product and services to another corporation. It is useful approach and method if the purchaser of the license has a relatively large market share in the market where company want to enter.
Franchising- Franchising strategy is another effective strategy for enter into the new market (Grigor'ev and Suslova, 2014). It is an arrangement where one party who is franchiser grants another party who is franchisee the precise to use its trademark or trade name, system, approaches, process etc in order to develop and market a good and services.
Partnering- It is another one of the effective approach and strategy for enter into the foreign market. It is useful strategy on those markets where the culture both business and social is substantively different. In a simple word it can be said that partnering is an arrangement between two corporation and parties. In this arrangement, partner share their profit, loss, risk etc and they maintains transparency regarding each and every information regarding business.
Joint Venture- A joint venture is an arrangement between two or more people and corporations to work together for particular purpose or on specific project. In this aspect, two and more than two parties and organisation works together and shared their ownership, returns, risks and governance (Schneider and Schmidpeter, 2012). Organisation uses joint venture strategy for major four reasons such as for enter into the new market, for acquire capabilities and skills, for acquire scale efficiencies by combining assets and operation, and for share risk for major investment projects. It helps to parties in acquiring new business associates and referrals and also it helps in saving time.
Merger and acquisition- Merger is the combination of two organisations into one form. Whereas, acquisition refers to procedure under which one corporation taken over by the other. By use of this strategy, organisation can enter into the foreign market (Asghar, 2013). The main reason for choosing this merger and acquisition strategy is to improve corporation’s performance and accelerate growth. It’s another reason for enhance the positioning of business and increase market share.
As per the above discussion it has been analysed that there are various kinds of strategies for enter into the new market. As Oppo is going to enter in the United Kingdom so it will use Joint venture market entry strategy through which it can easily enter and sustain in the new market for long time. Joint venture is an arrangement in which two or more parties develop agreement for share their resources, skills, tools, approaches and procedure of business in order to achieve some specific task and goal. With help of joint venture contract two and more than two parties can improve their business performance, enhance the level of competitive advantage and minimise risk. It provides a way to organisation in enter into the foreign market and sale its product and services to the other country. Oppo should use Joint venture strategy for enter in the UK market by which it can easily minimise the risk of failure and improve its competitive advantage in the new market (Kitzmueller and Shimshack, 2012). There will very low risk of failure because revenue, responsibility, risk, resources, capability will be share with other organisation which have already set up in the UK market. Another major benefit of joint venture for Oppo Company is save expenditure and cost associated with marketing and operating activities. Oppo should join the popular and large electronic organisation in the UK which have great position and goodwill through which it can easily start and set up its business in the UK market.
By summarising entire report it has been assessed that in order to perform in the international market and become successful in the international level, organisation must have to consider international business environment. Before enter into the new country, corporation should analyse and assess the international market in effective manner. By political stability and regulation organisation will perform all activities and functions securely and safely in the in the UK market. Oppo have excellent outbound logistic through which it can easily create impressive position in the new market and become successful to operate its business. It has been also concluded that Oppo will get excellent level of success in the global market with help of its unique features of product and services.
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