All academic references can be found at the end of the report. Contents 1. 0 Introduction to the company and its situation 2. 0 Current and future business plan using STEEP analysis p. 3 STEEP table p. 3-4 3. 0 Chosen countries for internationalization p. 4-5 4. 0 SOOT analysis p. 5-6 5. 0 PEST table of weights analysis PEST weighed table Summary of total scores p. 6-7-8 6. 0 Appropriate entry method of internationalization p. 9-10 7. 0 Conclusion p. 11 1. 0 Introduction to Elected About Elected: Elected is a Japanese SEEM established in 1990 and based in Tokyo.
The company started with only 5 workers and is now a growing company employing 1 00 employees producing a wide range of quality electronic goods at a competitive price such as televisions, CD players, hi-if equipment and more using technology licensed from many multinationals. Elected only operates in Japan targeting therefore only the Japanese electronic market purchasing from local suppliers around Tokyo. Currently Elected is now struggling and has failed to increase its sales within the past two years seeing its profits decrease, failing to reach its goals, facing financial issues.
The company is finding it hard to compete within the current economic situation therefore Elected has decided to internationalist before it faces its first financial loss in the next year. Elected is searching for new markets, skilled graduates and cheaper labor. Managers need to increase their knowledge about the business environment and be aware of the advantages and disadvantages before implementing overseas. This report will analyses and compare the company’s potential situation in the current environment predicting its opportunities using a range of analytical tools such as SOOT,
PEST, and a weighted analysis. Three countries have been selected for its implementation, the external and internal business environment of each will be thoroughly analyses aiming to find the most appropriate country for Electrode’s future internationalization. Findings will be supported by research and references which can be found at the end of the report. 2. 0 Current and future business plan The STEEP analysis will help understand Electrode’s macro economy, determining which external factors can influence its success.
This tool is the most appropriate since it will help the company become aware of future issues determining the risks and threats and helping to avoid them. The STEEP table will also play an important role in determining the potential opportunities the company faces helping Elected make decisions in the future and improve its strategic plan. This STEEP table regroups the key trends likely to affect the electronic industry and Elected in the future: Table 1 : STEEP table Topics Socio-cultural Electronic devices are a trend nowadays. Consumes electronic market is in rapid evolution (Alter. Com, 2014).
Constant change. Branding is very important for customers. Increase in tablets, less and less laptops. In 201 5 tablet sales will beat laptops and PC’s (Anthony, 2014). Increase in use of social networks such as twitter and Faceable. Cultural and social values. Age of consumers. Birth rates and death rates. Approach of consumers. Increase in consumers using the internet on electronic devices. Internet is more accessible. Technological Innovation since the market is constantly in evolution (new products, new software… ) taking into consideration new generation technology. Short innovation circles (Apple).
R&D: Vital to keep up-to-date research and development since the electronic industry is in constant research for improvement. Economic Crisis impact on purchasing power. Economic crisis since 2008. Potential competitors joining the industry market. Economic growth, taxes, inflation, various rates which all impact a firm’s economic situation. Labor costs, exporting from other countries. Lower labor costs than Japan in certain emerging countries. Exporting possibly be more expensive than staying local. Environmental Consumers more and more aware of CEO-friendly measures. Consumers willing to pay more for CEO-friendly plants (Buck, 2014).
Firms just be aware of environmental standards, pollution, going green. Politic Legislation, importing and exporting overseas. Must be aware of legislations in other countries. Trade unions. Standards. Must be aware of countries’ standards (ISO… ). Laws concerning wages, workers, working hours, labor. Unstable political climate. 3. 0 Chosen countries for Electrode’s internationalization: Brazil: According to the CIA (2014), Brazil nowadays is one of the most influential emerging countries and has made major advances in terms of economic development becoming now the sixth largest economy worldwide.
Recently the government has stabilized inflation and stabilized the currency which resulted in an increase of capital inflows and has strengthened the import and export market. Many firms have implemented in Brazil since it has the potential to expand in the near future which is very interesting for Elected. Hauberk Signage and Sahara (201 0, up. 3-22) point out that Brazil is part of the BRICK countries considered to be developing rapidly. In terms of electronics Brazilian have the highest consumer electronics ownership (Ahead, 201 1). Brazil has noticed an increase in developing systems and reduces designed for educational purpose.
This means there is a market for graduates and potential graduates specialized in electronics. These factors must be considered since Elected is searching for new markets overseas and skilled graduates. However the CIA (2014) does mention that there are concerns about Brazil such as its criminality and high income inequality. China: China is a well-known expert in electronic devices. Jinn (2006) states that China’s Ministry of Information Industry statistics states that China’s electronic industry has achieved growth levels three times that of the GAP Roth rate.
The electronic industry has gained advantage over the machinery manufacturing and metallurgy industries and has now become the top industry within China’s. The industry is producing new jobs, however since the market of electronics is increasing the amount of electronic industry related firms is also increasing leading to more competition within the market. Another interesting factor to consider is China’s proximity to Japan. Finally in terms of education, according to Sahara (2014), China has experienced a high increase in graduates boosting the amount of experienced graduates.
Internationalization in China can appeal to Elected since the company is searching for a new market. Chinese electronic market is rapidly growing achieving remarkable growth rates. Proximity should also be considered. India: Praiseworthy (2014) states that since the sass’s India has emerged as a leading software importer. There are interesting clusters to consider such as the region of Bangor which is now a leader in the software producing industry and is home to many international foreign firms. The region of Bangor is now considered to be the new Silicon Valley.
Sahara (2014) dates that India has also experienced a major increase in terms of education with a high rise in graduates in the past decade resulting in experienced young graduates available throughout the country. Since Elected is searching for new markets and experienced graduates, India is an interesting country the company must seriously take into consideration. 4. 0 SOOT analysis: Table 2 is a SOOT analysis which will analyses internal factors demonstrating Electrode’s strengths and weaknesses. The tool will focus on identifying these factors and help the business set up a strategic action plan which is critical for
Electrode’s implementation. In order to succeed the company must be strategic and have a clear vision of its potential forces and issues. Moreover as stated by Yuan (2013), the SOOT analysis approach is a better tool for investigating problems from a strategic perspective. Table 2: SOOT analysis Strengths Weaknesses Elected International team. Flexible Relationships with mum Donations Small skilled team Multilingual Highly motivated Knowledge of the electronic environment Diverse product range Top management team Customer loyalty Start up cash drain Language barrier
Poor decision making Culture differences Old fashioned Pressure from external factors Only supplies locally Big investment No experience in internationalization Unknown countries 5. 0 PEST table of weights: Table 3 is an external analysis of the opportunities and threats likely to affect Elected using a PEST table of weights framework providing an overview of the political, economic, social and technological factors within the external environment which can affect its activities and performances. Each country will be analyses, weighed and compared to Japan.