Literature Review
Business expansion in different countries beyond going the regional market is one of the most significant ways of enhancing the revenue growth of an organization. Apart from revenue growth business expansion helps a particular organization to create their brand identity and image. This particular study has provided an in-depth analysis on how a telecommunication company existing in Malaysia would expand their business process in Brazil. Axiata has been chosen as the selected telecommunication company. Headquartered in Malaysia this particular organization has already spread their wings in the regional market widely. After receiving a huge response from the local customers the organization has decided to spread their business in New Zealand (Axiata.com 2017).
The overarching term, telecommunication encompasses a distant communication that includes via telephone, television, radio, computer network, wireless network and so on. The primary products based on which a particular telecommunication company run their entire process of business imply internet facilities, video, talk-time packages and so on. The telecommunication industry has rendered the emergence of GPS (Global Positioning System). However, the primary aim of telecommunication companies is to make a bridge between the sender and the receiver. As a result, people belonging to different geographical boundaries can communicate with each other.
The service process of Axiata has become popular in the regional market of Malaysia. As per the corporate governance structure, the organization is flexible enough to communicate with the people of any cultural backgrounds. Therefore, the range of target market of Axiata is high. Providing excellent process and services, long-term profits and nurturing the needs and demands of the people are the primary pillar of Axiata. However, New Zealand being a developed country is possessed with sufficient number of population where the people are flexible to be accustomed with advanced technology. Therefore, the market demand of Axiata is expected to be high as large number of population existing in New Zealand is dependent on technology.
In this specific part, an effective critical review would be conducted in order to evaluate the importance of suitable market entry strategy for launching a Malaysian telecommunication company in the market of New Zealand. Various eminent scholars have pointed out their own opinion regarding the market entry strategy and various threats of new market entry. In this specific literature review, the study would focus to critically evaluate major aspects of new market entry.
Baker (2014) opined that after the emergence of telecommunication the consumers and the service providers do not have to struggle for making an effective interaction. Before, purchasing a particular product and service the customers can get an in-depth overview regarding the reliability of products as well as service process. Therefore, telecommunication industry is possessed with a major significance in change the customers’ buying behavior. As already mentioned, New Zealand is out an out developed country in terms of both economy and technology. In this specific country, the telecommunication company like Axiata would get an immense opportunity to enhance their target market.
Market Potential Of Telecommunication Industry In The Market Of New Zealand
Belleflamme and Peitz (2015) stated that the market potential of telecommunication industry in the market of New Zealand is high. More than 90% of the inhabitants belonging to New Zealand are well educated.
As a result, the people are very much dependent on technologies. In this kind of situation, the demand of internet, telephonic communications and digital media is getting high in the market of New Zealand. Therefore, the entrance of Axiata is expected to be positive as per the current market trend. The customers belonging to different geographic locations of Australia show their interest for using the products and services of Axiata. Automatically, the sales volume of Axiata would be high.
PESTEL Analysis:
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Political |
New Zealand is situated at the East of Australia. Berthon et al. (2012) opined that the rules and regulations implemented by the New Zealand government are very much strong. Business organizations while running their wings in the market have to maintain tax policies, labor law, anti-discrimination act and so many. As per the New Zealand government policy the labor force is very much expensive. Therefore, the business organizations in order to run their business in the market of New Zealand should have the economic strength to pay a sufficient rate of amount to the labor force. On the other hand, the government of New Zealand does not impose their regulation on the business organizations so that they can run their business process smoothly. |
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Economical |
New Zealand is economically developed country. Therefore, the business experts would not have to face difficulties in order to implement brand value strategy or high cost strategy within the business services. The target customers belonging to New Zealand are flexible enough to afford the expense of Axiata and its telecommunication services. |
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Social |
The rate of literacy in this particular country is high in range. As a result, the business of telecommunication in the market of New Zealand is having a big scope (Boso, Cadogan and Story 2013). The target customers belong to different cultural and religious backgrounds. The need of telecommunication service is general. People belonging to different cultural attitudes show their interest for using the products and services of Axiata. Therefore, the number of target market in the soil of New Zealand for Axiata is high. |
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Technological |
New Zealand is out an out technologically advanced country. The rate of literacy in the society is high in range. As a result, the inhabitants are very much based on telephonic communication or internet. However, Axiata is having thus better scope to expand their business process and to grab the attention of customers. |
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Environmental |
New Zealand is having an excellent ecological system. This particular country is situated 900 kilometers away from Australia. Therefore, this particular area after being developed in both socially and economically is controlled from over pollution (Cavusgil et al. 2014). Therefore, business organizations do not have to struggle for establishing their business process in the market of New Zealand. |
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Legal |
In order to run the business process in the market of New Zealand, the business organizations have to follow some of the major acts and regulations. The acts include data protection act, right to information act, anti-discrimination act, gender equity act, health and safety act and so many. |
Table 1: PESTEL analysis for entering into the new market
(Source: Christensen 2013)
Porter’s dimension model is the most effective ways of evaluating the possibilities of competitiveness in nationally. Porter’s Diamond model is constituted with six primary aspects that include:
Factor Condition:
In order to establish a new business process in a specific country, every individual organization has to be concerned with some of the major factors. Christopher and Peck (2012) opined that the factors include the availability of physical resources, human resources, knowledge resources, capital resources and so many. New Zealand is possessed with immense skillful and efficient employees who have the ability to be associated within a telecommunication company (Grant 2016). Therefore, the organization like Axiata does not have to face difficulties in order to collect all the required resources for the business organization.
Demand Condition:
Harms and Schiele (2012) opined that the aspect of demand condition implies that the business organizations intend to implement business resources within the process as per the market size, market demand, market growth and sophistication of the current industry. In case of Axiata, the organization has decided to enter into the market of New Zealand for their business expansion. At the very initial stage, Axiata’s market size would be very much limited. Therefore, the business experts would not have to recruit large number of employees at the very first stage.
Horbach Rammer and Rennings (2012) stated that a particular business organization tends to run their process by maintaining a proper rhythm only when this specific organization has numerous supporting industries. For an example, the contribution of broadcast industry in enhancing the business process of telecommunication companies is high. The primary vision of broad cast industry is to transmit the messages by multiplying in different geographical markets. Therefore, most of the broadcast companies tend to receive their internet or communication service process from telecommunication companies. New Zealand is completely based on large number of broadcast industry. Therefore, the business process of telecommunication companies would get benefits and facilities due to the entrance of broadcast industry.
Environmental Scanning Techniques
As per the particular business aspect of Porter’s diamond model it can be evaluated on how the business organizations intend to make appropriate business strategy and policy for making a threat for the current market. Axiata while dealing with the customers of New Zealand would focus to form new business strategy based on which the target customers would like to pay their attention towards Axiata instead of going to its rival companies (Hoskisson et al. 2013). At the same time, the organization like Axiata has to maintain a proper structure as well for keeping a constant control over entire business process.
Behind the enhancement of a specific business organization, the government is having a major influence. Axiata in order to run their business in the market of New Zealand would get innumerable support from the government due to the unbiased laws and regulations of New Zealand government. On the other hand, it is undeniable that this particular country is not endowed with political chaos (Kapferer 2012). Therefore, customers do not have to face any difficulties while purchasing products as well as services from the Axiata. As per the law of labor force, the organizations established in New Zealand are bound to pay a justified remuneration to the employees. Automatically the internal relation between the employers and the employees are flexible due to government regulation.
Chance can be synonymic as opportunity. Every business organization should utilize the positive aspect of chance while running their entire process of business. While maintaining a proper recruitment process the human resource managers get the chance to appoint skillful and competent employees beyond going the gender biasness or cultural biasness (Khanna and Palepu 2013). If the human resource managers of Axiata become flexible enough to deal with different employees from various cultural backgrounds, the organization would be able to take collective decision for achieving the business progress.
Kim and e Mauborgne (2014) stated that an effective market analysis implies to evaluate the expectation of target customers as per the geographic, demographic and psychographic segmentation of the country. In addition, the business analysts tend to focus on analyzing the market strategy of competitors. Based on the market strategy and policy of the competitors, the managers intend to reform the market plan. Therefore, market analysis is highly important for evaluating the customers current needs and demands.
Internal capabilities include the facilities regarding infrastructure, channels, relationship with the supporting industry and so many. If a particular country fails to provide proper media support for promoting the brands to the doorstep of customers the organization has to apply another strategy such as direct marketing, personal selling, sales promotion and so many. At the same time, the infrastructure is highly important forwarding the customers attention (Kozlenkova, Samaha and Palmatier 2014). As per the internal revenue capability of Axiata, it has been observed that this particular organization is able to provide a proper infrastructure to grab the attention of customers belonging to New Zealand.
PESTEL Analysis
After conducting an effective market analysis the business experts would be able to evaluate on how the current target group prioritize on the products and services of new established organization. As per the market structure of New Zealand, it has been observed that people are highly dependent on the telecommunication industry. Kumaraswamy et al. (2012) stated that this particular industry acts as a major bridge between sender and receiver. Therefore, Axiata would not have to face difficulties to spread their wings in the market of New Zealand. At the same time, it is undeniable that the success of entire process of business is highly dependent on the customers’ expectation.
While launching a new business in a different country, the specific business organization has to face innumerable threats both from the customers as well as from the rival. Therefore, in order to establish their business in the new market, the business experts have to follow some of the major threats initially that are as follows:
While entering into the new market the business experts fail to get appropriate media tool for promoting their business process. Most of the broadcast media shows their reluctance for giving opportunity to the new business organizations in their channels. Reputed print media shows the same concern (Laufs and Schwens 2014). Therefore, without getting a proper promotional tool, the business organizations face innumerable challenges in order to position the brand to the mind of target customers. On the other hand, prestigious broadcast media tend to demand high expense from the organizations. The business experts have to face difficulties in paying the expense of those channels.
Competitor’s market strategy is a major threat for the new business organizations in order to establish their entire wings in the market. While launching a new business, the business experts have to compete with the numerous established companies surviving for several years in that particular industry (Levy and Murnane 2012). Therefore, the organizational managers have to be concerned regarding forming business strategies and policies. For an example, in order to draw the attention of customers business managers have to implement low cost strategy for drawing the attention of large number of customers belonging to the market. At the same time, the product quality and service process should be innovative to garb the customers’ attention.
Whenever a Malaysian business organization enters into the market of New Zealand the service providers generally face linguistic barriers at the workplace (Morgan 2012). The customer executives are not flexible enough to make a fluent conversation with the service users belonging to New Zealand. Therefore, communication barrier becomes a major threat for running the entire business process successfully. The customers do not show their interest for purchasing their products and services due to this linguistic barrier. In this kind of situation, the business experts should provide an effective training session to the customer executives for enhancing their communication skill (Morgan et al. 2012). Consequently, the issue regarding communication barrier can be resolved.
Porter’s Diamond Model
Economic strength is one of the most important factors that prevent an organization for expanding their entire business process in different geographical market. Axiata being a Malaysia based organization may have to face difficulties in affording sufficient amount of money for launching a new brand in the market of New Zealand.
As already mentioned, New Zealand government is very much strict in terms of their regulations and acts. As per the labor cost law, the business experts have to pay large amount of remuneration to the existing employees. Therefore, Axiata should have sufficient financial strength based on which the organization would be able to provide justified amount of money to the employees. Papadopoulos and Heslop (2014) stated that the business organizations should follow necessary acts and regulations such as health and safety act, right to information act, data protection act, anti-discrimination act and so many.
Purce (2014) stated that before using a particular brand or a product, the customer generally tends to focus on the infrastructure of the organization. At the same time, before joining within the business organization as an employee an individual applicant tends to focus on the physical strengths, human resource strengths and technological strengths of the organization. If the company like Axiata fails to make a proper infrastructure in the market of New Zealand, the organization would have to face challenges in entering in the new market.
Ripollés and Blesa (2012) stated that the business structure of New Zealand differs from the structure of Malaysia due to the differences of psychological cultural and target group. Therefore, the business experts should have the efficiency to deal with the customers of new market. If they fail to make an effective communication with the customers the entire business flow loses its rhythm and progress. In order to overcome this kind of situations, the business experts can receive an effective training session to develop their skills and competencies.
Before expanding the business in new market, the managers should form appropriate market strategy in order to overcome the expected risk. Without making any proper market strategy the business experts should not precede their wings. Market strategy helps an organization to get an in-depth overview about the needs and demands of customers and their expectation from the service providers (Ross 2013). At the same time, risk analysis helps to make alternative business strategy as well that enables to defend sudden crisis. In order to overcome sudden risk factors making strategy of highly significant for telecommunication industry.
Suitable Market Entry Strategies
Schuster and Holtbrügge (2012) opined that the rate of revenue growth is increased as per the profitability level of organization. Before entering into a new market the business experts have to provide new business strategy and policy as per the current trend of market. As a result, the business organization reaches the peak of success. The growth of revenue rate is highly dependent on the customers’ business growth and success in new market.
If a particular business organization is successfully able to form effective market strategy the customers show their interest for purchasing the products and services. Automatically the range of target market becomes high. In this kind of situation, the organization after entering into the new market gets the scope to gain internal fame and reputation (Seamans and Zhu 2013). The customers belonging to different geographical market become interested to use the products of Axiata. Effective market strategy helps the marketing managers to collect detailed overview about the needs and demands of target customers belonging to international market.
After evaluating the entire literature review, it can be analyzed that the entire study has focused to discuss on the importance of market strategy for entering into the new market. In this specific study, various eminent scholars have expressed their own point of view regarding the benefits of new market entry. It has been observed that in nowhere the scholars have mentioned the negative impact of telecommunication on the society. While expanding the business process in the current market of New Zealand, the organizations should conduct an effective risk analysis based on which the business experts can apply an alternative business strategy as well. In this specific literature review, the study could have focused in evaluating Porter’s five force analysis as well in order to conduct an overall industry analysis (Zhu and Iansiti 2012). The entire review has been conducted by providing the opinion of different contemporary scholars regarding market entry strategy. The scholars’ opinion could have been given for making a critical analysis for coming into a conclusion.
It has been observed that while expanding the business in the market of New Zealand, Axiata may have to face innumerable challenges. The recommendations of overcoming those challenges are as follows:
Market survey is highly important for collecting an in-depth overview regarding the current needs and demands of the customers. At the same time, it is undeniable that market survey brings the customers and the service providers in one particular point with the help of which both the two participants can make an interpersonal communication with each other. On one hand, customers get the scope to communicate directly with the service providers and provide them an immediate feedback (Terpstra, Foley and Sarathy 2012). On the other hand, the service providers as well can get the opportunity to express their upcoming offers and benefits to the customers for drawing their attention towards the service process of Axiata. If the service providers receive any kind of negative feedback from the customers, the concerned service providers along with their managers can change the business strategy to grab customers’ attention (Turnbull and Valla 2013).
SWOT analysis is highly important for evaluating the strength, weakness, opportunities and threats of a business organization. Wilson and Gilligan (2012) stated that before launching a business process in the new market the business experts should conduct a market analysis as well. As a result, the business managers based on the market analysis would be able to form market strategy and policy. Without evaluating the strength and weakness of Axiata, the business experts should not form new business strategy for drawing the attention of customers in the market of New Zealand.
The success of a telecommunication industry is highly dependent on the service process of customer service system. Axiata is not exceptional to that. As per the socio-cultural aspect New Zealand differs from Malaysia. As a result, the customer service executives should have flexibility with the language used in the soil of New Zealand. In this kind of situation, the customers executives needs to receive a professional training session for enhancing their communication skill (Zhou, Wu and Barnes 2012). If the service providers fail to make an effective interaction with the customers, the target customers tend to hesitate to purchase the products and services of Axiata.
4. Conclusion:
This particular study has provided detailed analysis about the importance of making new business strategy for entering into a different market. After evaluating the entire study it has been observed that Axiata after starting their journey in the market of Malaysia the business experts have decided to spread their wings in the market of New Zealand as well. New Zealand is out and out developed in technology. Therefore, people belonging to this particular country would show their interest in using the products and services of Axiata. In this specific study however, a critical analysis has been conducted. In this specific critical analysis of literature review external analysis has been conducted for evaluating the possibilities of current market growth in New Zealand. On the other hand, Porter’s diamond model has also been used in this specific study for evaluating the industry analysis. Various market strategies have been analyzed critically in their specific study for overcoming the various market threats for launching a new business in a different country.
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