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This report details an international business strategy report for "HK Electronics", a new company that wishes to offer computer screens at discount prices to a New Zealand market from its base in Hong Kong. The report will identify the new product be produced and marketed, the host and home country, business strategy, entry mode choices for an international market, organizational structures and human resources required.
"HK Electronics" shall specialize in the purchasing and branding of a new high resolution LCD computer screen. The computer LCD screens will be manufactured in mainland China and imported to Hong Kong where they will be distributed to a New Zealand market. HK Electronics will buy the monitors from a supplier in mainland China. The monitors will be branded as HK Electronics products. Service for the monitors will be negotiated with a repair company within New Zealand. Service centers will be arranged in most of the big capital cities within New Zealand.
Host and home country and human resources
"HK Electronics" shall have its host country based in New Zealand, with its home country based in Hong Kong. The Hong Kong branch will be responsible for dealing with the mainland China manufacturer of the LCD monitors.
The New Zealand team will have an office head manager and a small team of marketing personal who will be responsible for the marketing throughout New Zealand of the new product. There will also be a small accounts team who will be responsible for securing the product orders and developing and continuing the relationship with distributors within New Zealand. There will also be a customer service employee who shall be responsible for answering calls about product enquiries and support. The Hong Kong office will negotiate orders from the 3rd party supplier in mainland China and be responsible for product delivery to New Zealand. The Hong Kong Office will have a head manager, quality assurance personal to ensure a quality product from the China manufacturers and distribution staff for organizing goods transport to New Zealand.
Freytag and Thurik (2007) investigate how a culture's social, economic and educational system can affect the success of then entrepreneur within that society. They refer to this level as the level of legitimacy for the entrepreneur. A high level of legitimacy would mean that the society has given the entrepreneur tax concessions for business start-ups and subsequent higher social status. On the other hand, for a low level of legitimacy, the international entrepreneur may be presented with resentment and face operating difficulties.
Strategy to Government
Dunning (1997), highlights that national governments have a decisive role which affects the economic activities and competitiveness within their country. Hence both the regulations of New Zealand and Hong Kong will be fully investigated.
The unique selling point will be a superior quality resolution monitor at a cut price to the existing market price in New Zealand. The manufacturer of the monitors, based in mainland China, will manufacture new higher resolution screens exclusively for HK Electronics. The target market will be IT suppliers within New Zealand who wish to place orders for the monitors. Discounts will be given for larger orders.
The current market of LCD screens in New Zealand are restricted in quality and have limited resolutions. There is a market for improved quality, in terms of resolution monitors, at reduced prices. HK Electronics will differentiate themselves and their products from their competition and convince consumers to switch brands. Since the new monitors will have a higher resolution capacity than ones on the existing market, HK Electronics will capitalize on this features in order to distinguish itself from the competitors.
In relation to western countries like New Zealand, the average consumer has "seen it all", according to Christopher (1996). The consumer these days is much more demanding and more critical of marketing claims and campaigns. Given the experience and sophistication of the modern consumer, Christopher (1996) indicates that the marketing strategy must be focused on superior customer and consumer value. Hence HK Electronics will be able to offer discounts as the monitors will be coming straight from the China factory.
Advertising of the new LCD monitors will be placed in suitable IT magazines within New Zealand. According to Sissors and Baron (2002), the two major print advertising approaches are newspapers and magazines. When compared to television advertising they are typically a little cheaper. In planning a print advertising campaign, the manager must consider a year in advance in order to adequately project magazine publication rate increases over that period. National magazines provide allow campaigns in specific areas and states of the country. Newspaper control the sections more and have different sections relating to different audiences. HK Electronics will advertise the new monitors in special IT sections of newspapers. This may also be applied to magazines that specialize in computers and peripherals.
Current market conditions
The IT market in New Zealand is consistently rising. According to the Ministry of Economic Development (2003), based on a survey of IT businesses in New Zealand, the IT industry within New Zealand for the 2002 financial year was worth $7055 million, up one per cent from the previous year. The IT peripherals sold in New Zealand during 2002 was $383 million, up from $326 million in 2001. There have been six consecutive years of growth.
Identifying emerging markets
When entering an overseas market such as New Zealand, strategic alliances are noted as the most suitable way for an overseas company to enter an emerging economy with success (Pisano, Ireland, Hitt and Webb, 2007). The culture, political and legal systems are often very different in emerging markets. New ventures should be able to explore and exploit this at the same time. Due to increased and intensive market globalization, together with increased competition, companies are now looking at emerging economies' markets.
Early Internationalization factors
Zucchella, Palamara and Denicolai (2007) discuss the factors leading to early internationalization of firms within in their first three years of starting. There are two factors, precocity and speed, that occur in early international expansion. HK Electronics will expansion plans as soon as business opportunities emerge so that the firm can benefit from first mover benefits. They are then able to learn more quickly about their new markets and also access profits soon than their rivals. Zhou (2007), finds that for firms wanting to internationalize early on, foreign market knowledge is more likely to come from opportunities across national borders. Foreign market knowledge allows early and quick internationalization.
Knowing the market - Diffusing quickly
Zhang and Dodgson (2007), in discussing the technology based sector, show that the possession of relevant international technical standards provide considerable advantages for companies wishing to quickly internationalize. Country and cultural factors constrain quick and early internationalization. The developing of a new international entrepreneurship must understand the characteristics of the technology products and markets, business systems in other countries and cultural differences for the successful management abroad. Hence a market survey of the existing monitor suppliers will be performed in New Zealand to identify the competition and understand the market.
High technology products, such as computer monitors, have typically short life cycles. Hence it is seen as advantageous to diffuse our products quickly and broadly. One must use an international market and the globalized economies make this task easier these days. High technology companies are rarely able to rely on a domestic market (Zhang and Dodgson, 2007). Kuivalainen, Sundqvist and Servais (2007) investigate international new ventures or global start-ups, sometimes known as "born-globals'. A born-global firm is defined as a rapidly internationalized firm less than three years old with at least twenty five percent of turnover coming from a foreign market. The benefits in becoming internationalized are increased sales, profits and market presence. Two key elements concerning time are firstly the time it takes to found and secondly the time it takes to begin operations and the speed of subsequent growth. An international perspective, together with management and staff motives are common features of born-globals from around the world (Kuivalainen, Sundqvist and Servais, 2007)
The importance of local knowledge and network building
Being an international entrepreneur requires local knowledge of whether the given product or service is desired, culturally accepted and also how the product value will be communicated according to Mu, Gnyawali and Hatfield (2007). In order to build up relationships with new countries that have different cultures, it is beneficial to develop social and business networks in the new culture. By building up these networks, new information about the market can be obtained, even if the links are not strong or weak. The information can then be used to overcome culture differences and improve the chances of success within the new country and or culture.
As indicated by Bender and Ward (1993), often there is a long gap between the development of new technology and seeing the resulting financial benefits emerge. These innovative areas however should be been as long term strategies and cleaner engines and safety are issues that are likely not to change in terms of customer value but rather increase.
The New Zealand business manager will oversea the complete running of the New Zealand operations and this will be overseen by the Hong Kong head managers of HK Electronics. The Marketing team within New Zealand will have a Marketing manager who will oversee the running of the marketing campaigns within New Zealand. The accounts manager will be in charge of managing the accounts team. The Hong Kong Managers will oversea the entire HK Electronics operation including the managers in New Zealand.
This report detailed a new LCD high resolution monitor for Hong Kong based company "HK Electronics" wishing to market their products in New Zealand. The report detailed the importance of distributing high technology products quickly due to rapid change in consumers always wanting the latest products in the market. The IT market in New Zealand is relatively strong with continued growth in the IT peripheral sector. The social, economic situations of business policies will be considered in New Zealand due to the differences from Hong Kong.
The new product will be superior to the existing LCD monitors and also be priced less than the competition due to discounts achieved from the Hong Kong distribution office. Advertising will be placed in IT relevant magazines and newspapers to attract New Zealand distributors. Network building within New Zealand is essential in increasing contacts with distributors and develop business networks.