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You have been asked by the CEO of a major Australian Bank to advise them on their strategy formulation for International expansion. 
The Bank has developed a reputable brand in the Australian and New Zealand markets and is now looking for suitable acquisitions and strategic partnerships in foreign markets in order to grow their business.

The markets that they are currently assessing for entry are France, Brazil and Korea.

You are required to assess the attractiveness of each market and put forward recommendations for future action.

This assignment should be completed in groups of 3-4 students. Each group must submit a written list of group members and contact details, as well as get approval from their lecturer on the company or organisation they have selected by week 6. Note that you may not get the assignment submission links unless you are registered in a group on Blackboard. 

France's Market Economy and Potential for Growth

Many companies build capacity and invest for the creation of economies of scale. Organizations target expanding into new markets through the efficient use of their potential and the creation of more sustainable opportunities for income. As a result, different opportunities exist both in developing countries which have a demand which is increasing, and in developed countries, which have a high demand. For success, organizations need to have a plan and target for their strategy for international growth. A strategy for international expansion is comprised of a strategy for entry into a particular market including choices which are crucial regarding the main markets which are being targeted, creating an operating model, brand positioning, service and product value offerings, resource allocations, and the determination of channel strategy and target customers. A strategy for market penetration which is successful ensures the most efficient and suitable use of corporate resources and assists organizations in increasing their success.

France’s market economy is highly developed. Being the world’s sixth-largest economy, it has a market that accommodates both government-owned and extensive private enterprises, with the government owning various key sectors for infrastructure including telecommunications, aircraft, electricity, and railway. However, the government has increasingly tried to promote enterprises which are private, with holdings of the government being let off in different sectors including the financial sector including banking and insurance, airways, and telecommunications. At the end of 2006, the country’s Gross Domestic Product (GDP) on a Purchasing Power Parity (PPP) reached an estimate of $1.871 trillion (Briguglio, Cordina, Farrugia and Vella 2009 p. 230).

France is based on a developed economy and has a free market structure which is considered to have a freedom of 66.1% with a rank of twenty-six out of forty-one for the freest European economies (Eyre, Pavan and Bodineau 2009 p. 432). Some French economy highlights include education, retirement benefits, a strong system of social services, low-income inequality rates, and low rates of poverty, among the world’s largest economies. However, the economy of France has a main weakness of having a high unemployment rate as estimated at the end of 2006, of almost 9% (Feld and Schneider 2010 p. 122). The economy of France has a good productivity, which was measured to be higher than the Germany, UK, and USA productivity, by OECD’s latest published figures in 2005. However, the engagement of a low proportion into the workforce, there is a significantly low GDP per capita as compared to other developed economies, for example, the USA and Europe. The economy of France is centered on the tourism industry, which is the main integral part of the market as the country is the world’s most popular tourist destination. Other important markets in the French economy include manufactured items, agriculture, labor market, and capital markets.

Strengths and Weaknesses of the French Economy

The market of Brazil is organized along capitalist lines and is a free market economy. As of 2006, the economy of Brazil, as measured in Purchasing Power Parity (PPP), is the world’s ninth-largest, and most large in South Africa with a GDP aggregate of US $1.813 trillion (Cajueiro and Tabak 2009 p. 1566). The economy of Brazil can be characterized as an economy which is mostly driven by technology and has grown quickly over the last few years, since the start of the industrialization process in 1930’s (Chang et al. 2008 p. 170). The country is part of Brazil, Russia, India, and China (BRIC) countries group which is perceived to eclipse the current major economies in future as they have a potential economic superpower. Some key Brazilian markets are industries including mining, Agricultural and mineral resources, Money and capital markets, and labor markets.

The market of Korea can be used in the definition of the Korean market structure, and although there is a division of the country into North and South Korea, the South Korean economy is generally referred to by the term “Korea”. The country has adopted the Western-style market structure, with the market economy being the twelfth largest worldwide, and the 3rd in Asia after China and Japan. In terms of Purchasing Power Parity (PPP), the Korean economy is the eleventh largest in the world and the fourth largest in Asia after India, Japan, and China. The economy of the Korean market has grown rapidly and is referred to as a “Tiger Economy.” Korea’s economy experiences moderate inflation, an even distribution of income, export surplus, and low rates of unemployment. The main Korean markets include labor markets, commodity markets, and money and capital markets. The capital market of Korea is small and has low quality. The leading banks include the Korea First Bank, the Korea Exchange Bank, the Korea Development Bank, the Commercial Bank of Korea, and the Chohung Bank (Mirzaei, Moore & Liu 2013 p. 2930).

France has a population of 64.8 million as per the year 2017 and increased GDP of 2.3 percent from 1.1 percent in 2016 indicating that the country has a high consumption of different products (Naisbitt et al 2015 p. 43). Furthermore, the country’s economy is growing at a high pace because of strong business robust and external demand with the government implementing supportive financing conditions and a gradual corporate tax cut. Currently, France has economic freedom of 63 percent and its economic ranked 71st freest in 2018 globally index and 34th in the European region (Facchini and Seghezza 2018 p.151). The economy overall is above world average but regional is below average. The labor freedom of the country is at 45 percent with labor markets reforms and lower labor taxes providing a conducive environment for foreign companies to invest in the country. Trade is significant in the country with average tariffs implied at 1.6 percent. The trade freedom accounts for 81 percent, investment freedom 75 percent and financial freedom of 70 percent (Yilmaz 2018 p.1). In general, the French government do not interfere with foreign investors but directly invests in them. The financial sector is strong with a limited number of foreign banks. The banking sector is considered as one of six country’s economic assets. In 2018, the French banking industry recorded 347 banks with three French Banks among the euro’s Global Systematically Important Banks (G-SIBs) (Cohen, and Scatigna 2016 p.56). The country has experienced rapid growth of technology as it provides flexible and convenient banking activities with mobile banking used by the most bank customers. Therefore, it is clear that French has a large market size which can generate more income.

Brazil: A Potential Market with Small Profit Margins

Brazil’s economy has started to experience rapid growth ever since the country’s economy shrank in GDP by 7.7 percent from 2014 to 2016 (Allen 2016 p.15). Currently, the GDP has grown by 1 percent from 2017. The central bank of Brazil has cut its forecast growth from 2.6 percent to 1.6 percent. Brazil is 153rd freest economy globally with an economic freedom score of 51.4 percent (Palma and Portugal 2014 p. 824). Its overall score has decreased significantly with the steep drop experienced in business freedom, labor freedom, and government spendings. Furthermore, Investment freedom is rated at 50 percent as well as trade freedom (Palma and Portugal 2014 p. 824). The applied tariffs account for 8.3 percent and corporate taxation of 34 percent (Pomerleau 2014 p.436). Banks are diversified although involvement of states in credit markets has increased significantly. Furthermore, the government bond yields have raised as a result of uncertainty about election outcome indicating that the banking sector in Brazil has dropped in terms of market shares and profit margins. The current county’s big sectors banks have not prospered yet. Concerning recession, the big banks have not gained their return on equity (RoE) with the current foreign banks still stuck in single units because the central bank of Brazil is slashing high-interest rates with industry recording low profits from 14.5 percent in 2016 to 6.5 percent in 2018. The lending and from banks is lower and expensive. The banking market of Brazil has few banks with the country only having twenty-three banks despite the country having a high population of 208 million a and high unemployment rate of 13.3 percent (Sachsida, Mendonça, Loureiro and Gutierrez 2010 p. 93). Therefore, it is clear that the Brazil potential market size in the banking industry is small and none profitable and not ideal for foreign investors.

South Korea economy has grown rapidly with country recently recording a GDP growth of 3 percent in 2018. Furthermore, the economy of South Korea has an economic score of 73.8 emerging to be 27th freest economy in 2018 (Facchini and Seghezza 2018 p.151). The country has unemployment rates of 3.7 percent and a population of 52.1 percent. In the banking industry, the country has 148 license banks with average applied tariffs of 4.8 percent. The banking sector is still stable and large with small financial firms struggling to survive because of stiff competition. Furthermore, the country has a higher government openness to the foreign investors. Therefore, the potential estimation size and markets in this country are extremely large and only large corporates benefits.

South Korea: Large and Stable Financial Market

Breaking into the French market has various challenges which potential organizations must deal with. The highly concentrated networks and chains of retail distribution, as well as the occasional global suppliers and manufacturers of France that have a strong control over the retail networks being used. A disappearance of the independent retail/wholesale outlets has been witnessed, and a replacement with retail distribution networks and chains with high shares in the France market and in other territories of the European Union. To keep up with the challenges in the market, an organization must maintain constantly changing theme designs, creativity, ongoing competitive market innovation, and high retail markup.

Potential problems in the Brazilian market include the protection of intellectual property, where there are great concerns due to the high piracy and counterfeiting levels in the country, including long delays in the trademark and patent examination, and internet piracy. In addition, genetic resources, plant variety protection, technology transfer contracts, and patents are highly regulated by the law, with the country providing a separate protection framework for genetic resources. Furthermore, geographical indications and trademarks in Brazil are regulated by the strict IP law with an acquisition only allowed through registering with INPI. Moreover, the National Council to Combat Piracy was established by the Brazilian federal government in 2004 which excessively enforces the regulations which sometimes may affect the cooperation with the representatives of both the private and public sectors (Batlle, Pérez-Arriaga & Zambrano-Barragán 2012 p. 215).

Some of the challenges affecting foreign businesses in the Korean market include price reduction pressure to match local firms, competitive domestic organizations (e.g. the Korea Exchange Bank and the Korea Development Bank). However, firms bringing an edge which is innovative, exhibiting a true commitment, and are patient usually succeed in Korea. Additionally, the traditional approach to business deals in the Korean market may pose challenges for organizations planning on venturing into the market, as Koreans feel that contracting is just the beginning of a relationship in business. The approach differs significantly with the approach in other countries and organizations should be aware of the aspect before venturing into the Korean market (Oh, Chang & Martynov 2011. p. 290).

The future economy of France is set to experience the growth of 2 percent because of robust business confidence and external demands. The business investment of the country is believed to remain high with labor markets expected to strengthen further and unemployment rates expected to reduce significantly. However, the government budget is set to remain high with inflation projected to pick up as there is the possibility of an increase in economy firming and wages.

Challenges for Organizations Breaking into French Market

In Brazil, the economy is expected to continue growing despite the country experiencing economic recession for the last five years. Furthermore, by 2019 the economy is expected to reach 2.8 percent from the current 1.6 percent (Fouré, Bénassy?Quéré, and Fontagné 2013 p.672). The financial marketsz such as banking sectors are expected to experience solid investment growth with the recovery of private consumptions. After a significant deterioration, the outcomes of fiscal is set to develop further. The GDP growth of Brazil is expected also to grow by 0.8 percent from current 0.2 percent in 2020 with unemployment rates expected grow by 12.1 percent and bank interest rates expected to increase by 6.75 percent with inflation increasing by 1.2 percent (Marazzo , Scherre and Fernandes 2010 p.269). The government debt to GDP is set to grow by 83 percent with business confidence developing by 55 percent by 2020 with foreign investors, the corporate tax will drop from actual 34 percent in 2018 to 30 percent in 2020 and expected to remain constant in 2019 (Rovere, Dubeux, Pereira and Wills 2013 p. 70)

In South Korea, the economy is set to experience a growth rate of 1 percent with employment rates growing at a pace of 4 percent and overall economy of the country developing by 3 percent (Marazzo, Scherrer and Fernandes 2010 p.269). The inflation rates of the country will rise from the current 1.5 percent to 2.25 percent with government spending to GDP increasing from 38 percent to 0 percent. The business has the confidence of the country is set to expand from 73 percent to 80 percent.

In support of the international effort of combating the financing of terrorism and laundering of money, the banking regulations of France have changed significantly thus affecting the way cheques are handled, as per the recommendation of the Financial Action Task Force. Additionally, there are no restrictions on the repatriation of provided capital as it is carried out by banks that are approved. Trade barriers in France include complex safety standards which are not discriminating but are applied rigorously hence complicating access to the market.

The transfer pricing regulations of Brazil are designed to prevent the avoidance of tax hence complicating international trade. Around twenty years ago, the government of Brazil implemented the introduction of a series of rules in order to discourage the evasion of tax and avoid the undue transfer of profits through the conduction of transactions between multinational companies. The aspect resulted in the application of pricing rules of transfer to goods, rights and services movement between similar groups. Taxpayers face numerous challenges occurring mainly during great economic instabilities, including fluctuations of foreign exchange (Gay 2016 p. 119).

The Korean government has liberalized the controls of foreign exchange in line with the benchmarks of OECD which is a foreign firm investing under the Foreign Capital Promotion Act terms. The firm has a permit to remit a considerable part of its profits as long as it makes a submission of its financial statements to its foreign exchange bank. Trade barriers in Korea include issues with the verification of imported goods from other countries to proof the country of origin.

According to Hill (2008 p.1), any foreign company intends to invest in a country must consider cultures differences before it enters its market. The cultural differences are languages, religion, political states, demand types, and religion. In cultural forces, education, family and national identity are manifested. Behavior, morality, designs, roles and ethics cultures influence the cultural messages. The universal wants and needs in the community and consumer trends cultures determines how the foreign country can gain market power. Above all the cultural aspects the most important consideration is language barriers. For example, doing business in France requires the organization to consider formality of French people as they are extremely of their language. Furthermore, appreciation of etiquette, different style and approaches in french determines the reputation of the company. Additionally, the organization needs to consider education system cultures of the country before it starts its operation. If a company ventures in the country with a strong education, the system it will benefit significantly from highly trained professional, innovation and customer satisfaction.


The study sought to analyze the Brazilian, Korean, and France market in order to formulate a strategy for the international expansion of a major Australian bank. The bank should decide on the best market entry strategy whose selection is based on the appropriate foreign market between France, Brazil, and Korea by exploiting their different advantages. The bank should also make an arrangement for a subsidiary or whole ownership, in a strategic alliance or a joint venture. The bank may pursue the various entry routes in the Brazilian, Korean and French markets depending on the different entry reasons. Joint ventures are considered to be the best strategy for entry into the three markets as they are the most cost-effective in the expansion of a foreign banking environment.  The analysis and identification of competition in a potential market is critical in the provision of tremendous insights on the best strategies to expand in to a particular international market. The organization will be able to acquire information which is valuable in regards to the kind and types of services and products already available in that particular market and the innovation types required for successful competition.

When weighing all determinants of market entry including political, economic and social aspects I think the banks should consider investing in France as the country has a good opportunity and favorable macro-economies. The consumption of banking products in the country is extremely high and the economy of the country is stable. At some point in France, cultures are open up for Australia cultures. Furthermore, the country has a higher population and a limited number of foreign banks shows that the market is less competitive as compared to South Korea.

The best strategy for entering the French market is by considering pricing strategy. As many banking product consumers tend to use mobile banking, lowering of transaction charges on transactions will encourage the large population to invest with the company. Therefore, I recommend the bank to further consider a joint venture and partnership market entry. 


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