Unit 39: investigating international business
P5: understand the strategies used by international businesses
Unit 39 is all about investigating international business. This P is the final assignment. My suggestions are approved by the financial department as well as by the board of directors. My senior made me in charge of the strategy. The next step to take before entering Australia is to construct a strategy about how this will take place. In other words, I have to develop a strategic plan how you are going to enter Australia. A strategy in nothing more than a decision making with well-considered arguments. I need the previous findings of P1, P2, P3 & P4 in mind. The four mean elements my strategy embraces are Marketing, Production, HRM and Technology.
Identifying & motivating new markets
why have I chosen to supply the products EasySecure has, to Sydney, Australia: EasySecure is a professional company that has extensive experience with security, based on biometrics. We help large and small organisations to the hardware and software that enables their access based on iris scans and fingerprints can lock. Of course have we, in this role, access to different suppliers and customers. This makes use a leading player in this sector. I want to start in Sydney because of the central business district (CBD and popularly referred to as the City) is the main commercial centre of Sydney, New South Wales, Australia. It extends southwards for about 3 kilometres from Sydney Cove, the point of first European settlement.
Australia has 23,052,575 million citizen. Sydney has 4,627,345 million citizens and 14,308 thousand of those citizens live in the Central Business District because, Sydney has the largest economic sectors, as measured by the number of people employed, include property and business services, retail, manufacturing, and health and community services.
Marketing information systems
Market information systems help business track and keep up with the events of the market.
Reason international promotion
The reason of why Easysecure is going to Sydney Australia is because the Sydney CBD is home to some of the largest Australian companies, as well as serving as an Asia-Pacific headquarters for many large international companies. The financial services industry in particular occupies much of the available office space. So that means big building with important information, so with our products we can keep is save.
We will advertise on billboards, newspapers and on trade fairs, to make people know we are there. Even when we advertise that we are producer and supplier, we don’t sell to the end-customer. It would make companies more interested because the people already know us. We will start with just some local business papers and we will move to bigger advertisements.
Cost of promotion
Cost of promotion:
Let say one ad in a trade managzine cost 75 euro. And in Australia you 12 big magazines. This will cost: €75 x 12 = €900,- per month. And we want to do billboard also. Say one billoard cost €850 and there are 1000 billboard in Sydney but you only want to do in your neighbourhood, and in your neighbourhood are only 25 billboard but you only want to use 10 of them so that will cost: €850 x 10 = €8.500,- Price for a stall at a trade fair will be €75 and there are maybe 6 trade fairs related to the biometric industry. So that will cost €75 x 6 = €450,- Total cost of promotion: €9850,-
Trends and prognosis
EasySecure must follow the trends in the biometric industry or else they can’t be number one in the Netherlands and can’t grow in Australia.
SWOT internal and external
* Since one’s fingerprint is unique, it is technically very difficult for a thief to replicate * Easy-safe-speed high quality
* Keys, cards, passwords, PINs and passing is history
* Changes with 1 mouse click implemented
* Compatible with all electric locks
* No additional cost
* Easy to use
* Language independent
* For every organization fit: from small business to multinational * Independently tested
* The standard solution in biometrics
* Inability to enrol some users. About 2 % of the population have poor quality of fingerprint, especially the elder people and manual worker. For these cases one need to consider other biometrics or any other solution. * Performance deterioration over time. Although the fingerprint is a stable physiological characteristic, it can suffer some small changes along the time and therefore it can affect the performance of the whole system. To overcome this problem, may be necessary to re-enrol the fingerprint and/or use multiple fingerprints enrolment. * Association with forensic application. The fingerprint technology has been associate with forensic and this can cause discomfort to some people. Specially, in the countries where it is not habitual the use of fingerprint.
Opportunities in Australia
* Technological advances
We know that technology changes too fast and this would make biometrics be easier, faster, and more accurate. * Combinability of Biometrics and another security systems It would be great if biometrics would be combined with security systems like passwords, account numbers, etc. * Terror threats
If there happens to be great terror threats and security fears, biometrics would become a boom. More and more individuals would like to have it imposed
by their governments. * Weather in Australia
Because of the different climate in Australia we make our products “Australian climate” proof, so your finger prints are easier recognised. Threats in Australia
* New market competitors (possibility for competitors to offer similar products) * Economic downturn
Economic depression would make BIT less likely to be implemented. People would like to have food more and not expend on things like this. The government’s concern would also be how to feed his people and not use the money for things that are not that of basic needs. * Artificially created biometrics
Inputting artificially created biometrics (e.g. artificial fingers, high-quality voice recordings, image of the iris), or in other words, fake biometrics would be a hurt to the biometric system itself. * Different attacks at the system
There’s a great possibility of developing a technology that can access biometric systems through input ports and surf the data-bases.
PESTLE of new market
Australia is a safe destination for investment. The country’s political and regulatory environment is stable, open and progressive, providing investors with a high degree of confidence and certainty.
Australia’s business friendly regulatory environment is undisputed. In 2006, the OECD cited Australia’s approach to regulation as a best practice benchmark for other OECD countries.
Australia was identified as having the fewest restrictions on product markets of the 30 OECD countries, the least public ownership of business and the least restrictive impact of business regulation on economic behaviour.
Australia is one of the world’s rich, developed countries. It is also one of the world’s most industrialized countries. The economy of Australia is one of the largest capitalist economies in the world with a GDP of US$1.57 trillion. Australia’s total wealth is 6.4 trillion dollars. In 2011, it was the 13th largest national economy by nominal GDP and the 17th-largest measured by PPP adjusted GDP, about 1.7% of the world economy. Australia is the 19th-largest importer and 19th-largest exporter. Economy of Australia is quarterly forecasted by the Reserve Bank of Australia. Australian National University also supplements Probabilistic interest rate setting project for the Australian Economy, which is compiled by Shadow Board Members from the ANU academic staff.
Australian Business Etiquette (Do’s and Don’ts)
* DO partake in some initial “small talk” before a business meeting begins. Australians use this as a way of establishing rapport with their colleagues and is an important part of business etiquette.
* DO keep a certain amount of distance when in conversation with your Australian counterparts. Personal space is highly valued in Australian culture. * DO maintain good, direct eye contact with your Australian colleagues during all business meetings and conversations as this helps to establish trust. * DON’T over exaggerate or boast about your company’s abilities or build up business information. Self-importance is not a favoured quality in Australian culture; therefore you should remain modest and unassuming at all times.
* DON’T discuss aspects of your personal life during business negotiations. Privacy is an important element of everyday life in Australia.
* DON’T use aggressive sales techniques whilst negotiating. Your Australian business colleagues will dislike being pressured and may be put off by this approach.
The Department of Innovation, Industry, Science and Research strives as a key priority to encourage the sustainable growth of Australian industries by developing a national innovation system that drives knowledge creation, cutting edge science and research, international competitiveness and greater productivity.
An example of a law:
Australian Securities and Investments Commission (ASIC)
ASIC is the sole regulator of Australian registered companies and one of three Federal Government bodies that regulate financial services. ASIC administers the Corporations Act 2001 (Cth), the law regulating the incorporation, operations and management of companies. ASIC is therefore primarily responsible for regulating the conduct of corporations in Australia, and is also responsible for supporting the integrity of and fairness in company affairs and in financial markets. ASIC’s consumer protection function extends to the financial system by regulating the advising, selling and disclosure of financial products and financial services to consumers.
All Australian businesses can play a part in environmental management, but whether environmental laws affect your business directly will depend on your business activities.
Federal, state and local governments jointly administer the environmental protection laws in Australia through bilateral agreements. As a business owner, you should understand which laws apply to you.
The federal Environment Protection and Biodiversity Conservation (EPBC) Act External link, administered by the Department of the Environment, Water, Heritage and the Arts, covers the assessment and approval process of national environmental and cultural concerns. The Department also administers specific Acts that cover activities relating to: * the sea
* heritage issues
* hazardous waste
* fuel quality.
Determine marketing strategy:
In the product life cycle we (the company) will be in the introduction faze because we never started a business in this county. But our products will be in the growing faze. We will start with an active and aggressive marketing strategy, then strengthen it and increase the customer base. Than keep our customers with special service, then keep pulling the customers in with affordable prices and high service.
Export assortment & distribution
Adaptation/standardisation of production and promotion
EasySecure doesn’t have to change that much. We only need to make our products Australian weather proof. Because of the harsh sun we need standardise our products with mini sun screen. All of our products are water-and vandalise proof. We need to translate our advertisements from Dutch to English.
Product differentiation is the distinguishing of a product or offering to make it more appealing for the target market. There are a lot of biometric security products already there. But we have very clear and high quality products, so I am going to take advantage of that.
I will sell the products to wholesalers, dealers, big retailers and installers they don’t have to buy a specific amount, but we always hope they order over the €10.000,-.
Transportation and packing
We will transport with DHL using the boat method. Only when we have a emergent-delivery we would use the airplane. Because the boat is cheaper and
the scanners have long-shelf-life. The products will be sent in containers, we will also put the products in boxes so it is easier to transport them.
There is software developed in the Netherlands, Romania and Ukraine. hardware is from Germany, Austria, USA, China and South Korea. Everything comes to Holland to be put together, from there it will be ship to Sydney warehouse/service office. And from the warehouse/service office it goes to the wholesalers, dealers, big retailers and installers.
Logistics is the management of flow of products between point of origin and point of consumption. (This is closely bound to the supply chain) the logistics will rely on trucks and the local infrastructure for delivery. for the transportation of the products from the Netherlands to china I would suggest container shipment on boats. This is because it is cheaper than plane.
Incoterms, documents and insurance
The incoterm’s rules are a series of pre-defined commercial terms published by the international chamber of commerce (ICC) that are widely used in international transactions or procurement process. These will be used to regulate international transactions of EasySecure as well.
Export price per unit is 600 euro.
Australia’s per-capita GDP is higher than that of the UK, Germany, and France in terms of purchasing power parity. Per Capita GDP (PPP) Australia is ranked fifth in the world (IMF 2011). The country was ranked second in the United Nations 2011 Human Development Index and sixth in The Economist worldwide quality-of-life index 2005. Australia’s sovereign credit rating is “AAA”, higher than the United States of America and Australia’s four ‘Big Banks’ are among the ‘World’s 50 Safest Banks’ as of April 2012. The four largest banks in Australia are also known as the “Big Four”. The services
sector has grown considerably, with property and business services in particular growing from 10% to 14.5% of GDP over the same period, making it the largest single component of GDP (in sectorial terms). This growth has largely been at the expense of the manufacturing sector, which in 2006–07 accounted for around 12% of GDP. A decade earlier, it was the largest sector in the economy, accounting for just over 15% of GDP.
Partly in advance partly at arrival is the method EasySecure will be using. Because people there don’t like to pay the full-price and not know it might not arrival. And the companies want to be sure they get the full price. To partly in advance partly at arrival is a perfect method. (the 50/50 when ordering you have to pay the half and when it’s arrived you have to pay the other half and then get the order.)
Costs of payment
China and Australia to say goodbye to U.S. dollar
China, in collusion with Australia, is preparing to deal a blow to the sluggish and fragile U.S. economy. China is preparing to enable direct currency exchanges with Australia, in what many believe is a pilot program to see if the U.S. dollar can be ousted as the world’s reserve currency. Read more on: http://www.catholic.org/business/story.php?id=50344
as I said earlier in P4 I would rather work with the price difference than depend on the USD.
The International Monetary Market (IMM) was introduced in December 1971 and formally implemented in May 1972, although its roots can be traced to the end of Bretton Woods through the 1971 Smithsonian Agreement and Nixon’s suspension of U.S. dollar’s convertibility to gold. The IMM Exchange was formed as a separate division of the Chicago Mercantile Exchange, and as of 2009, was the second largest futures exchange in the world. The primary purpose of the IMM is to trade currency futures, a relatively new product
previously studied by academics as a way to open a freely traded exchange market to facilitate trade among nations. 1 euro = 1.37 Australian dollar
1 Australian dollar = 0,73 euro
Currency risks are a financial risk posed by an exposure to unanticipated changes in the exchange rate between two currencies. Australian dollar is a quite stable currency. It operates on a floating exchange rate and those movements in the exchange rate itself are actually a direct influence on inflation. The AUD nowadays rises and the euro is unstable. It might be well that EasySecure moves Australia because there is a better stability for a company.
Human resource management
Staff is one of the most important assets of a business. “business is build out of people” So it is always of vital importance to keep your employees productive and happy. I want to expand my staff and get Australian people as well. Only Dutch and English speaking people are good enough because in Australia they speak English there.. But the Dutch people I hire they speak also fluent English. But I want to get some Australian employees who know the people better and therefore could use certain tactics and strategies what we do not know(yet).
Foreign personnel is very important, because they know about the culture and the ways how things work in the country. And with the social skill it will indirectly be a financial advantage.
Expatriate personnel (at recipient country)
EasySecure will have expatriate personnel when they start in Australia. Because they already know how the company works and they can learn and help the personnel which will be hired in Australia how to manage their job at EasySecure.
Recruitment (how are you going to recruit and what are the criteria) Recruitment is about hiring the right personal or candidate for the job, Vitalla will do this through background checks for example: what was his job before and why did he quit? Also looking at their CV, ask question why he wants to work with us and if he has experience in the biometric industry and in the marketing industry.
Cross-cultural training (which intercultural skill are needed) Personnel should know how to handle different cultures and cultural differences in the most discrete way. Personnel should know the customs of the country and culture in which they are working, makes them function better and more professional. Maybe the only big difference is driving because in the Netherlands we drive on the right side and in Australia they drive on the left.
Internet, inform how internet supports export of your company Nowadays as a professional business you have to have a website or be active on the internet. Not only will it increase the ‘professional’ image but also you can attract customers and provide an extra service. With the internet we can track our orders so we exact know where our products are and how long it still takes to get it on his final-destination.
Industrial development, what changes took place in coming up? Industrial development is an ever-continuing process that will keep to change and improve business. The use of the best machinery and equipment will help the employees most of the time and even make them more productive some of the time. EasySecure tries to keep their equipment and machinery up to date.
Adapting technology to conditions, how are you keeping pace with market and technological change The technology is quite advanced and all our staff members are up to date if we speak about their knowledge of the technology. If the technology develops and something new comes out I want to train at least some employees of all the departments. Then they can do that kind of
work but if they want they can teach it to the other’s as well. Then everyone is able to use the technology.
Financial forecast & break-even for the coming 3 years
The production and the purchase cost of 1 product is €400,-. 1 box full of products is €8.000,- and we sell 12 boxes a year, for the coming 3 years. That makes 36 boxes which means the whole production cost for 3 years is €288.000,-
I don’t need to pay rent because I deliver it to a distributor. Business travelling will be €14.400,- for 3 years. And the communication cost like internet, telephony, etc. will be €1000,- for 3 years.
Payments conditions: when purchasing our product there are several condition the customer have to follow. Our main payment condition is : 50/50 deal, The customer pays 50% before arrival and the other 50% at arrival. When choosing transport for the products. The customer is fully responsible for the shipment. Example: when the ship sinks with the products. The customer will receive a new shipment of products. The first 50% he doesn’t have to pay again. EasySecure doesn’t work with interest because of this payment condition. Currency cost:
Currency of money is big issue, when the AUD drops and euro rise or when the euro drops and the AUD rise, it can mean loss or profit. The currency will be unstable, for example: We buy our product in the Netherlands for €500,- and sell in Australia for 836,67AUD (is €600)(currency€1= 1,39AUD) our profit is be 100%.
We get €100.000,- subsidy of the government of the Netherlands, because they want to “tickle” company to globalise.