International expansion for business
Is international expansion a necessity for a company’s long-term survival in the ISP business? Why or why not? “The business of providing Internet services for consumers, known as ISP is a business that does not need face-to-face interaction in order to survive. Not only does it not need human interaction, it does not necessarily need to be on the same continent in order to deliver these services to consumers. Sips are very low cost to establish and can be very simple to run.
However, when a simple business such as an ISP competes with others In the same market, they often need key advantages ever others In order to survive. The decision to expand internationally Is one In which will now be discussed. ” “Like any new business prospect, the decision to expand globally will need to take into account many factors. There are numerous factors that will play In deciding whether or not to expand, however among the most Important are, expertise and knowledge, of not only the product, but also the targeted area.
With these, a company can make the educated decision to enter a market whilst at the same time analyses if the set up costs and capital investment are proportionate to the potential profit from he new region. Knowing these costs and what they will do to the short-term performance of a company are crucial when analyzing the potential to enter the global market. ” “Another crucial factor In going global Is a company’s management strategy. This strategy will determine everything from choosing the right people for the right jobs, I. E. He selection of appropriate expatriates, right through to developing cultural awareness programs to ensure their product will be received appropriately in the new market. Management must also analyses the potential new market and determine the climate. Is the market flooded? Can the infrastructure hold up with the new service? Can the socio-economic climate accommodate an ISP? These questions are what management must be well grounded on and have answers or strategies to overcome in order for an ISP to survive effectively on a global scale. “If an ISP chooses the wrong market to enter, the company can take a financial blow that could see operations in the parent nation affected or stopped. However, with the right management strategies, an ISP can look to taking over companies that may have faltered In this area. An effective strategy to entering the global market Is takeovers. An ISP can enter a market via takeovers to quickly acquire customers and capital. These are not what have made the previous company fail. Management and customer service is usually where a company falls short and ultimately fails abroad. “Looking at the above considerations, it is necessary In the long-term for an ISP to enter the global market. However, the long term In the cyber context can be much knowledge of their parent nation, they can then look to new countries to tap into and deliver the same service. Globalization has created an environment, especially in a Weber context, where people need and desire the same things; this is no different for Internet services. Developed countries are now focusing on Internet speeds and capabilities more than ever.
If an ISP can deliver a high quality service with effective management and customer services, there is no denying that they won’t succeed abroad. ” 2. Consider the case of an Australian ISP wishing to expand internationally. Develop Criteria for market selection and determine a list of five countries that fit those criteria. Then determine the order in which these countries should be entered. When developing a set of criteria for market selection, a lot must be considered and tailored to suit individual companies by providing a set of specific criteria that pertain to the individual needs of that company.
For an Australian ISP to select five countries to target, they must first have a sound business strategy and decide how they wish to run global operations. This can be done two ways. Individual operations for each country, or a holistic approach that incorporates every nation under the one operation. For an ISP, the latter is more appropriate as unlike consumers, the Internet goes not need down time, and therefore can be run as one continuous operation. ” “The first target of an ISP to consider when selecting criteria for other nations is the socio-economic climate.
The political and economical health and stability of a potential market is the most important factor for determining the viability of entry into a market. If a country is not stable with either of these two factors, then the outcome for a new competitor in any major area for this nation becomes uncertain. Political upheaval can result in anything from bans to telecommunications and Edie, new taxes on line rentals and restrictions on foreign companies. Any of these outcomes would easily hinder the prosperity of a new market to tap into.
The other side of this issue is the economic health of a nation. With economic strength comes stability and growth, both with capital and investment. If a nation is suffering economically, then growth slows and the population become uncertain and less willing to spend and consume. However, if a nation is seen as both economically and politically stable, then these are desired nations for an Australian ISP to enter. ” A second factor that needs to be accounted for before a new market is entered is the existing infrastructure or planned infrastructure.
This determines many things such as the client base, service potential and entry costs for the company. If a nation has extremely well established infrastructure, then a company must analyses if the market if flooded or if its technology can meet the demand of consumers. If it is found to be possible, then this is also a good incentive to enter. However, if there is little or no infrastructure and more so, no plans for this to change, then a company must weigh imply, a nation with sound infrastructure or plans to expand in telecommunications is desired before a company should enter into the ISP market. “The final factor in determining the viability of a nation is the cultural gap between the potential and parent nations. Cultural divide can be overcome with effective management, advertising and market strategy, however a company must be fully aware of the differences and what needs to be done before entering the market. China has sound infrastructure and is economically strong, yet through government bans, most social media sites have been banned. This has created a subculture that s limiting to the potential for a new competitor to enter the ISP market.
Marketing is one of the most important strategies to be successful at when entering a market with a large cultural divide. When Pepsi entered the Asian market in the sass’s, a translation error by the marketing team delivered their slogan as “Pepsi brings your ancestors back from the grave”. This cost the company millions and delivered a decisive blow to their market potential, allowing a competitor, Cook-Cola to capitalist on this new market. ” “Looking at the above factors, the five nations an Australian ISP should enter are; Papua New Guiana, Zombie, Ukraine, Thailand and Vietnam.
These nations are economically and politically stable and all have sound infrastructure. The reason these nations have Ben selected are, their number of broadband subscribers are similar in proportion to Australia. Papua New Guiana, Thailand and Vietnam are geographically close to Australia and have been growing in trade and market agreements with initiatives such as SEPARATE (South Pacific Regional Trade and Economic Co-operation Agreement). This ensures governments want to work together to promote economic growth and increase the standard of living. Zombie and the
Ukraine have very similar markets to Australia and are continuing to grow, as according to reports from the International telecommunication Union in June 2013. ” “The order at which an Australian ISP should expand globally should be, Thailand, Papua New Guiana, Vietnam, Zombie and Ukraine. This would see a steady increase in geographical distance and cultural separation. All of the mentioned nations are similar in telecommunications growth and have the infrastructure and market to support a new competitor. ” 3. What is the most appropriate international market-entry strategy for an ISP telecommunications provider? Why?
There are many International market-entry strategies that all have benefits that reach across a range of different markets and can be applied to almost any international expansion from a company. Some of these include, strategic alliance, joint ventures and mergers/acquisitions. In the case of an ISP, the most appropriate strategy for international market-entry would be merger/acquisition via foreign direct investment (FED). FED presents an ISP country the easiest means of acquisition over case study, Sips often fail because they cannot deliver the customer service that is demanded of consumers. Often the technological as’. Y and ability to deliver appropriate service exists, however, Sips fail when they fall short in customer service. ” “Acquisition of another ISP delivers the opportunity to obtain an established customer base without the expenses of advertising and marketing. At the same time it is hassle free for customers as they are now able to give a new company a chance to deliver the service they require without having to shop around for a new provider. This opportunity, if done successfully will allow a new ISP the opportunity to out perform the previous owner in areas such as customer service and market delivery.
If an ISP successfully analyses their predecessors market strategy, identifies where they need to improve, and adjusts their market strategy, there is a high chance of success at retaining old customers whilst at the same time gaining new ones. ” “Retaining customers’ means customer loyalty is present. This is important to establish early as marketing and advertising can then tailor their strategy to not only keep these customers, but also learn from them to shape they way they target potential customers.
This then, if done successfully will lead to an increase in customers and a gain in market dominance. ” With the above benefits of acquisitions, there are certain disadvantages, which if not analyses successfully, will lead to an ISP over committing to a market that they may not be best equipped or prepared for. Acquisition of a large firm may mean a large financial commitment. This high start up cost may not pay off if the new market shifts. That is governments impose restrictions or the economic climate alters.
This could leave a newly acquired ISP worse off then before they were taken over. ” “Furthermore, if the market potential of the new region is overestimated, then the company again will have spent large and achieved little. Market research is important to analyses the viability of entry into a specific market. If the market crashes or is not viable for private entities, like most Sips are, then this will also mean the market potential for the region was not viable and many Sips in the region would not survive.
An example of this is when governments regulate the Internet and control all servicing. If a government did this, they could have the monopoly on the market and eliminate every competitor, meaning this region would be closed to all FED. The above advantages and disadvantages of acquisitions by Sips present challenges ND benefits in every aspect. If a company can create a solid amount of research on a region and are confident there is great potential for them to enter the market, then the best method for entry is via FED by means of merger/acquisition of other Sips. . How significant is culture and government regulations to the Success of ISP businesses expanding internationally? To expand operations internationally. These two factors can benefit or hinder the success of any company that enters a new market. Culture and government regulations go hand in hand. Cultural belief ties in with government regulations, as Hess sets of values and beliefs are what shape a nation and ultimately their government policies. Likewise, a country will continue to mould its culture around the constraints of its government policy, I. . Middle Eastern nations model their customs of government policy about restrictions to females. These government restrictions, in hand come from old sets of values and beliefs from these nations. The same applies in a business context. ” “In terms of the telecommunications sector, if a government has liberal policies, the market will tend to be more competitive (Victor 1994). With liberalism, government elicits are lenient towards FED and promote investment through government incentives such as subsidies and grants.
Governments may also choose to set prices at lowered rate to encourage competitors to enter the market. With these incentives being created, governments must focus a lot of resources towards the implementation to these policies and incentives. This is very costly on a government as the time and effort to successfully deliver these packages can be extremely draining on resources. Likewise, companies waiting to enter the market must be prepared for the high costs ahead as with increased competition through verbalism, companies must spend more to promote their company and attract more customers.
Although a nation abroad may have a liberalized government, companies looking at FED in these nations must successfully analyses the policies and understand how different governments can be. This again can be very costly to align their company with altering their operations to align with a set of policies they were not accounting Culture can be the greatest tool to either make or break a new competitor abroad. If a country can successfully tap into the cultural climate of a nation, they can set up for success. However, the mistrust and apprehensive approach some nations have to foreigners can be the greatest obstacle.
Especially in an ISP market, if customers are undecided about a foreign company, they will opt for a local competitor, or one that closely aligns with their beliefs. An ISP that can successfully navigate its way through a nations cultural and political climate and still have the capacity to operate has the potential to be very successful. Culture is what its customers hold close and policy is what the government is willing to accept or reject. With both of these factors accounted for, the only contributor to heir success is their competitor.