Market Entry Strategy And Organizational Design For HICOM-Teck See In India

Market Entry Modes for Companies

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In the present times of business it has become essential for the firms to make plans that help them in achieving success (Aharoni, Tihanyi & Connelly, 2011). There must be a proper understanding of the competencies that are present with the company which will help them in surviving in the external and internal environment.  Every company aims to expand their market either by exporting products to another nation or by establishing their set in the new regions (Beamish, 2013). For entering into any country there are several kinds of modes which they utilise for reaching to new market. Company decides the organisational design, financial requirements and strategy for making it success. HICOM-Teck see has decided to enter into the market of India. For this it needs to use its competencies for entering in the new market while fighting with their weakness. This report highlights the internal environment of company as well as the strategy that it will choose to enter into the market. Apart from this it showcases the organisational design and structure that cited firm will choose for obtaining its objectives as well as staffing policy that it will choose for entering into the new market.

For any company it is essential that they select a market entry mode so that they can perform well within the country in which they want to expand their business (Brouthers, 2013). There are basically two major kinds of market entry modes namely equity and non-equity.

HICOM-Teck see is planning to enter into the market of India with Equity mode. In that also it has chosen to enter by opening their wholly owned subsidiaries. This category of equity modes helps them in entering with the freedom of taking innovative decisions (Nielsen & Nielsen, 2011). Since India is the low cost market where cost of setting up production unit is lower hence this mode can be effective. Since this company has an experience of working in developing market hence it will be easier for them to operate.

In wholly owned subsidiary also it aims to choose acquisition strategy. In this it will take control of some locally operating company and start its production in a totally new way. Using this mode of entry and the selected strategy of acquisition it can easily reach to larger part of the people in a very short time (Rugman, Verbeke & Nguyen, 2011). Amount of cost spend on making the set of many other things like distribution system will be less (Business news daily, 2018). This helps in saving a lot of money of the stakeholders of the firm. There is a complication that is attached with acquisition that it may face many kinds of structural problems due to the pre-acquisition assets of the company (Sinkovics, Yamin, Nadvi & Zhang Zhang, 2014).

HICOM-Teck See's Equity Mode in India

This mode of entry is chosen over the other because it helps them to penetrate in the market at a faster rate as compared to the other way. This will help in reducing the complexity of making new routes into the market (Van Der Aalst, 2013).

Since HICOM-Teck see has to change the technology that will be utilised by the previous organisation hence it will take some time. Till this time company can easily understands the complexity of the market and problems that can arise in the distribution system (Cavusgil, Knight, Riesenberger, Rammal & Rose, 2014). There are many kinds of problems that can arise within the firm while making such kind of acquisitions. Some of them are as follows:

Retaining and training: It is essential that HICOM-Teck see must retain or train previous stakeholders so that they can easily adapt new culture and working methodology.

Changing working environment: It is the roles of the management of HICOM-Teck see to provide motivation to the old employees so that they can understand new objectives of the firm and brief them about new cultural environment they aim to develop within the organisation.

Apart from this it is essential for cited firm to understand their strength and weakness in order to understand their own feasibility while entering the new market.

• This company is known for its innovative products as it has adopted a culture where large amount of research is carried out based on the demands of the consumers.
• Many years of experience in developing market can helps firm in coming to India.
• Highly skilled staff helps company in making their place in the market and hence achieving productivity that is desired by the firm.
• Highly valuable products according to the requirements of consumers (HICOM teck see, 2018).
• Bigger brand name in plastic industry inside Malaysia.

• Lesser amount of revenue for facing any significant amount financial failures.
• Lesser amount of asset is available to the firm for making any riskier expansion strategy.
• Lower experience of working outside Malaysia.
• Brand loyalty for this company is average which reduces their chances of achieving higher sales.

Strength can be utilised for tackling all the weakness that is present within the company (Verbeke, 2013). Company can take use of their reach department for understanding the demands of the market which will help them in maintaining their brand loyalty. Apart from this experience in Malaysia market can help it in expanding its base in Indian market. Skilled staff can reduce the amount of cost of operations as they can easily utilise the amount of cost involved in operations of the firm.

Since there are no major weaknesses of the company hence it can easily overcome it by making effective strategies. It is essential that cited firm take use of its core competency i.e. innovation for making into the marketing.  Monitoring and evaluation of the whole process of entering into the new market can help it to make effective changes in the whole process as per the requirement (Wild, Wild & Han, 2014). This will ultimately help in reducing the chances of potential threats that may cause by the weakness (Zott, Amit & Massa, 2011).

Apart from many strengths and weakness that this firm has there are many other factors that constructs internal environment of firm. It is essential that HICOM-Teck see understands its internal environmental factors that may influence the entry strategy of the firm. Internal factors that may influence the operations of the firm are as follows:

Organizational Design and Acquisition Strategy

Management decision making capacity: Decision making capacity of the firm’s management is higher and is known for their quick response to any kind of situations and hence taking effective decisions accordingly. In the new country cited company needs to have some of the experienced personals from the company that it has acquired so that it can take decisions understanding the complexity of the new market.

Availability of resources: This is a SME of Malaysia so it does have very large amount of physical resources but with the help of new investors it can easily arrange such amount of resources that is helpful for entering into the new market. It is having excellent trained staffs and managers at the top levels which help company in expanding in the new market.

Operational strategy that cited company can take use of while entering into the Indian market is new product development. This will help company to make products after understanding the needs of people in the market (Deresky, 2017). Since there are large number of consumers that are present within the market hence it is necessary that it develops new sort of products that can help them in making their place within the market (Yang, Hong & Modi, 2011).  It is also essential for the company to take care of the quality of product that is going to launch in the market (Doz, 2011). For achieving this HICOM-Teck see need to adopt the strategy of TQM and lean production so that cost of operations can be reduced while ensuring higher quality of products. It will also help company in reducing amount of wastage generated in the overall operations of the firm which is necessary in modern day.

Their corporate strategy before making an expansion is to make most out of the market and achieve a higher level of growth of the firm in the coming years. Cited company has also come up with the CSR plan where it aims to serve for the local area and help employees in raising their standards of livings. To satisfy the need of consumers by adopting best strategies in the market is another corporate strategy of the cited firm.

It is essential for the company to make an appropriate design so as to make sure that company do not fails to achieve what it had intended before entering into the new market (Dunning, 2012). There are larger amount of things that needs to be considered while designing the organisational structure of the firm.  They have adopted an organisational design where there are any levels of employees and all of them are taken as participants while making decisions so as to have broad idea about the topic. Most of the organisational decisions are taken by the leaders or management. There is larger number of middle level or line managers who manages lower level staffs.

Strengths and Weakness Analysis for HICOM-Teck See's Indian Market Entry

This company has adopted an organisational design in which they are divided in many units who has specific tasks to perform. This helps them in managing their task in a better way. They organise timely meetings where they decide the following requirements of the firm. All the departments of HICOM-Teck see works in collaboration so that objectives can be achieved easily and effectiveness can be obtained in the business process. Some of the organisational strategy that this company has adopted is as follows:

Global product: Global product of cited firm is plastic made items especially it is making parts for the car industry. It wants to develop new kinds of products by using new product development strategy which may help it in crossing new horizons of growth.

Global customers: This firm has many global customers which lie in various parts of the world. Big car manufacturers from all around the world are some of the biggest global customers for this company. These companies are also present in the India and some of them have their production units within India.

Inside India there are many cities that are densely populated and hence they have a large scope of expansion. It is to be understood that India is one of the fastest developing market in the world which can be one of the largest market of Cars in the coming years. Apart from this there are larger sections of the society that is having higher per capita income who can become potential consumers of the firm. Apart from this it is to be understood that India is a market where there is easy availability of skilled and qualified workers that are ready for working at lower cost. This provides a platform for the firm to expand in other parts of the country. On the other hand government is helping companies that are going to invest in various parts of the country. Due to competitive federalism inside India there is regional support for opening of new plants and hence company can expand to larger markets. One of the basic problem that arise in expanding its business in various parts of the country is slow federal system and their slow decision making approach.

There are larger numbers of youngsters that are coming up inside the nation. They have the capacity of purchasing larger amount of auto mobiles which can be effective sign for cited firm to reach to larger section of market within the nation. There is very larger part of the country which comes in the rural section. They are going to get developed in the coming year which is good for the infrastructure industry which further provides excellent opportunity to HICOM-Teck see to extend its reach inside the market.

Internal Environment Factors Affecting HICOM-Teck See's Entry Strategy

For entering into any country, it is essential for the firms to understand the financial requirements it will face while coming to the market (Gabrielsson & Gabrielsson, 2013). In the mode of entry that cited company has adopted, it will require lot of money. Since the firm has adopted strategy of acquisition hence it will not have to invest a lot in the basic infrastructure. This company needs to invest a lot in the technological infrastructure. For this they will require large amount of money as the technological software and hardware that will be required in the whole process is of higher cost. Larger amount of money is also required in setting up the distribution chain as well as relations with new suppliers. Company also need to invest a lot in the human resource as they have to train them about the new culture. Apart from this they need to recruit a larger amount of people for that also they need a whole lot of money. Inventory that this company needs to set up will require some of the money as well as the resources that this company will have to purchase will also require huge accounting of capital. It is essential that HICOM-Teck see sets up its research and development unit in this country only as the cost of experimentation within the nation is less. It would be better for the company if they take land on lease rather than purchasing it from the local people as it would cost less to the firm. It will be essential that cited firm does a heavy market research so as to understand the complexity of regional business. India is a country where larger set of population are perception driven and believes in the companies that have larger brand name hence this company has to invest a lot in marketing specially in advertisements through various mediums. Since cited firm has lesser amount of financial assets hence it will be better for the firm to utilise internet mediums for doing advertisements as larger amount of people are attached to it and it is cheaper than other ways.

This company also needs to invest in the communication mediums so that internal and external information can be easily transferred to all its stakeholders which ensure smoothness in the work process. Financial requirements will also be in the area of paying tax related to operations of the firm but in India it is on the lower side.

Operational Strategy and Corporate Plan

Even after all the expenses mentioned in the above part, It is to be understood that India is relatively a cheaper market where cost of production is less and the availability of resources is at lesser cost hence company can easily export their products to other countries. New ranking of World Bank suggests that in ease of doing business India has jumped up by 40 ranks which is a good sign for investors as their money will not go in vein and hence can generate a large amount of profits.

Every company makes staffing policy so as to recruit people (He & Wei, 2011). Staffing policy is three approaches to staffing namely polycentric, geocentric and ethnocentric. Selection of staffing policy is based on their culture of operations (Scullion & Collings, 2011).

HICOM-Teck see has various levels of staffs and hence they have chosen to recruit staffs accordingly. In the starting phase of entering into the nation management level staffs are being selected with the policy of polycentric. This is due to the reason that parent country staffs have better knowledge of understanding of work culture and hence it will benefit company in keeping its values unified. In the later part of the entry it is essential that firm utilises geocentric approach as it is highly important for motivation of local staffs (HULT, 2018). They can reach to any levels within the firm irrespective of country they belong to and only on the basis of merits they have. Geocentric approach boosts the moral of employee and assists them in reaching to new levels within the nation (INTERNATIONAL BUSINESS, 2018).

Conclusion

From that above based report it can be concluded that there are many challenges that a company faces while entering into a new nation. It is essential for the firm to understand its competencies so as to tackle the weaknesses it has. It is also essential that companies understands its internal environment as it has greater influence on the performance of the firm. Product differentiation and new product development are the two strategies that can help company in satisfying the needs of larger part of the market. TQM is another approach that will ensure the quality of product and services that company is producing. There is huge amount of financial requirement of a company while entering into a nation. All these have to be fulfilled so as to ensure smoothness in the operations. In the starting phase company can adopt the polycentric approach but in the later stage it is essential that company takes use of geocentric approach as it helps in motivating employees

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