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With the globalisation of the market on the higher and significant level, the companies now aims to expand their business operations on a wider basis. The foreign market penetration and entering into the new nation is becoming the major requirement of a company (Ang, Benischke and Doh, 2015). The report will lay emphasis on the market penetration strategy that will be taken in consideration by the UK based mobile phone firm, Binatone to enter into a newer mobile phone market in India. This report will analyse all the entry modes, that are been taken in consideration by the cited business firm to enter into a newer market. Apart from this, various theories are been taken in consideration by the cited firm to gain a better insight about the factors affecting market penetration in a new country. Also, the various sort of business factors to carry out the business operations in the targeted company is been taken in effective consideration (Laufs and Schwe
Analysis of different stability modes to be used by Binatone
Binatone is one of the leading electronic and mobile phone manufacturer in UK. It is the leading business firm that works in the mobile phone, electronics and telecommunication industry. On the other hand, India is one of the biggest economy in world and the fastest growing nation. In recent years, it has been emerged as one of the major consumer and manufacturer of the mobile phones and has seen a tremendous growth in telecommunication sector. Thus, all this factors have made India as one of the major country to have the potential market for the mobile phones of cited business firm. In such case, Binatone can penetrate and emerge as one of the major option for the customers in Indian market. To enter into the market, the firm will see through the better handling of the different entry modes that will help the firm to meet its operational and financial goals in the market (De Villa, Rajwani and Lawton, 2015).
Binatone would consider the various measures that will be taken in the organisation that will help in better growth and development of the organisation in the foreign market of India. The utilization of the different sort of the market penetration measures that will be undertaken by the firm will help business entity which will help the business organisation to handle a wide range of operations. The adoption and following of different sort of entry modes will help the firm to gain a better sustainability and stability in a foreign market. The effective analysis and adaption of the wide range of business entry modes will help the firm to achieve its targeted goals and handle a wide range of business operations in firm. The effective handling of the strategic entry modes will help mobile phone firm to develop a high level of productivity and revenue generation in a foreign market (Laufs, Bembom and Schwens, 2016).
The entry mode is a form of strategy or business function that will help the cited organisation to meet the strategic requirements of the firm and handle the different business operations which will help the business organisation to meet the operational requirement of customers. The entry mode style will help Binatone to develop a strategic approach to enter and establish in foreign market of India. The different business strategies that are been developed by the firm will help the business organisation to handle the trade organisation in a better and significant manner (Pongelli, Caroli and Cucculelli, 2016).
Market entry modes
Some major foreign market entry modes are as follows:
- Export: It is the practice of selling the goods and services that are been produced in one country into the market of another country. For instance, Binatone will produce or manufacture the mobile phones in UK and export them in Indian market for selling to the customers. It is basically of two types: Direct and Indirect. The direct approach uses the approach of capitalization of the economies. The production is focused in the home country, while the products are been sent out for selling. It is the best approach when the product volume is low (Gubik and Karajz, 2014). It also involves the processes like fulfilling the foreign demands like domestic orders by the means of distributors or sales representatives. In the indirect export, the company don't have the control over the products in international market. It involves the approach of having export trading companies (ETC) or Export merchants who will promote and sell the finished goods or services, manufactured by the cited firm. The major advantage of using the export approach is that it helps to keep a check on the foreign market. It also helps the firm to have a better handling of the different sort of relationship with its buyers to protect its intellectual property like patents or trademarks (Johanson and Mattsson, 2015). Also, it supports effective setting of R & D departments and develop effective marketing and sales strategies. Although, the major drawback of this approach is that it require regular investments to maintain the resource and personal changes in organisation. Also, the no control over the market in indirect export approach will impact the sales. Apart from this, the incorrect selection of export partners and strategy may hider the performance of organisation in foreign market.
- Licensing: It involves the usage of the international trade licence, allowing the foreign firms to enter and sell their products and services in the specific market or the country. For instance, Binatone accessing the licence from the trade authority or government to carry out the manufacturing and selling of its mobile phones in Indian market. In this approach, the owner of the firm is been granted permission to get the access to the resources and rights in the host countries, including the patents and trademarks. The approach of licensing helps in gaining the better introduction of the latest and updated technology in host nation and develop the skills of local labour. The extent of the licence is present up to the extent of understanding and knowledge of the host country towards that technology and product quality of the licensor. This involve the selection of the right business partners to function in the market and avoid any sort of competition (Wulff, 2015). The major advantage of this approach is that it helps the firm to generate extra revenue by implementing the latest technology and skill sets. Besides this, it will help the cited business entity to access the new market in host country, leading to its expansion without high risk factors. Other than this, the political risk is also minimum in this approach. The major disadvantage is it generate low revenue as compared to any other modes of entry and the loss of quality standards can lead to decrease in the sales and business efficiencies.
- Strategic alliances: it is a form of agreement that is been made between the different firms like sharing of technology and resources, developing joint ventures and have a minority equality participation. This entry mode s generally practised in industrialized nations, help in focusing on the creation of better quality of products and services and is created for short duration. For example, Binatone collaborating with a local technical firm to carry out its business operations and meet the needs and demands of the users in foreign market in a better way. It is one of the popular form of entry modes used by the organisation to enter into the foreign market (Hennart and Slangen, 2015). The major advantage of this approach is that it helps in the better exchanging and developing of technologies, keeping in mind the local as well as the foreign customer base of cited business firm. This will include the better development and utilization of the R & D department of Binatone and create the better products and services using the innovation. Other than this, the collaboration approach will help the firm to meet the global competition. Also, this will help in better scaling of the economy of host nation and reduce the risk factors to be faced by the business organisation. But the major disadvantage related to this approach is that the exchange of resources may lead to the contract or alliance to get forged up and reduce the benefit for both firms. Besides this, it creates a situation of dominance of one firm over the other. It may create a threatening condition for the less powerful firm in the alliance. Also, the technology or the knowledge that is been gained in the firm can be used against each other, impacting the performance, trust level and sales of both the collaborating firms. This has the major risk of developing unequal business relationship (Naidoo and Wu, 2014).
- FDI: It stands for “Foreign Direct Investment”. It is the approach in which the firm or the industrial sector gets the high amount of the foreign investment in the country, through various sectors. This approach helps the host country to increase the foreign currency reserve with the government and improve the trade relations with other countries. It can be implemented in the firm through various ways such as establishing a new branch in host country, acquiring the controlling share of an existing mobile phone firm in country and participate with other firm to develop better product and services. This approach has been quite controversial in certain countries for its direct approach and very low involvement of government in decision making but has the big advantage to generate high amount of revenue and investment in foreign country (Wulff, 2015). It helps in the development of better collaboration with the local firms and thus, will help Binatone to develop a better trade relation with India and manufacture and sell its mobile phones in Indian market. Although, the investment acquisition process will require the approval from Security Exchange Board of India. This approach helps the foreign organisation to have a technical and financial collaboration with and Indian firm in same market sector. Also, as per the laws, the recipient firm for the FDI has to take the permission and clearance from the RBI and local government to carry out the production and selling operation's in Indian market.
Thus, it can be analysed from the research that the different entry modes of penetrating the foreign market has certain advantage or disadvantage that can impact the overall operations of the business organisation in the foreign market. Thus, it can be said that the entry modes like exporting or licensing is quite appropriate for Binatone as compared to the strategic alliance and FDI. This approaches will lay a significant impact on overall functionality of the business firm. Other than this, it will take following measures in deep consideration (Hernández and Nieto, 2015).
Factors of growth and development
The major factors of the growth and development that are been taken in consideration are as follows:
- Economic indicators: Market penetration approach or entry modes like Export and Licensing will be developed by the firm, after taking in consideration the various sort of economic indicator factors like GDP growth rate, inflation rate, Balance of trade and annual growth rate. Binatone will look after these measures before developing a strategy to enter into the Indian market in order to ensure better handling of the wide range of business operations. The entry modes approaches like Exporting, licensing or FDI will create a positive condition for the business firm by contributing in the growth and development of the better economic indicators and economy of host-country, by the firm (Naidoo and Wu, 2014). These approaches or entry modes will contribute in better development and rise in productivity of foreign business firm. Also, the rise in income and economic stability of people in country has paved a better path for the firm to carry out the business operations in a better way.
- Country risk/ Political risk: Binatone has to look after the political or national risk factors like opposition from political or social group etc. These approach is been taken in consideration by the foreign business firm before entering in the host country. Other than this, the approaches like exporting, licensing and FDI are highly susceptible to get impacted by the political and national issues. This will not only impact the growth and development of cited business firm in foreign market but also can impact its brand equity (Gubik and Karajz, 2014). Thus, before investing in India in form of export or FDI, the mobile phone firm will look after the proper rectification of such impacting factors.
- Culture: the countries culture will also lay a very deep and significant impact on the overall functioning of Binatone in Indian market. The Indian market culture is quite open and liberal to adopt the latest and highly advance technical products and services, the mobile phone firm has very emerging market to sell its products and services (Johanson and Mattsson, 2015). The cited firm can utilize the approach of intermingling the innovation and cultural factors to develop the better products and services, keeping in mind the different sort of cultural obligations and measures. The firm can utilize the factors like using Indian languages to make the UI of its mobile phone or provide the customer support services in local region. This will help the firm to increase the goodwill and gain a better customer satisfaction level.
Thus, from the above analysis it can be said that the different entry modes can be utilized by UK based Mobile phone firm, Binatone. The approaches like Exporting, Licensing to carry out the trade in Indian market, developing strategic alliances with local technical firms and involving the FDI will help the cited business firm to carry out its business operations in a very effective way. Besides this, the consideration of these approaches with different factors like economic indicators of country, assessment of political risks and cultural background will help mobile phone firm to develop a better strategy before entering in foreign market.
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