Identifying a Business Strategy to Launch a Product in an Emerging Market 2

Identifying a Business Strategy to Launch a Product in an Emerging Market
Smart101 Corporation is a company that was established in January 2016. It is a small business that specializes in the production of an exceptional product which the wrist-reader. This product is used by customers for many purposes. It can serve as a wristwatch which customers can use for checking time. The product has a screen which can fold thereby providing a 3×3 high resolution that can be applied in reading e-books. The wrist-reader can also be used in surfing the internet since it is integrated with a Wi-Fi chip. As a CEO, I have considered the idea of launching this product in an emerging market. The product’s target market is the youths in the 18-24 age bracket. The product has shown excellent results in the US market since demand has increased tremendously. The company needs to tap into the international markets to exploit the opportunities that are available since there is great potential. The aim of this paper is to recognize entry business strategies that could assist in penetrating these emerging markets.
Issues the company is trying to resolve
The wrist-reader is a product that is unique in the market. The product does not have competition since it is a distinct idea that is new in the market. The company intends to resolve various issues for the young people. First, it will ensure that the target market is updated easily by using the wristwatch. Most youths in the 18-24 age group are people who are in school and time is an essential factor that needs to be managed so as to get the desired outcomes.

Having a wristwatch will allow them to be updated continuously in regards to time so that they can use time wisely for better performance in their academics. The company has realized that young people do not wear wristwatches since they think it is old fashioned. Smart101’s wrist-reader is a modern type of a watch that can help young people to do all sorts of things they do use their mobile phones or computers (Ahmed, 2014).
The company also intends to help young people access the internet with this product. It is made in such a way that it can surf the internet at very low cost. It is also very fast in providing information that people could be looking for. This product, therefore, will help solve the problem of internet access. Young people who cannot afford a phone or a computer can still access the internet using this product. Another issue that this product is likely to solve is the mobility issue. The wrist-reader is portable and also it is small in size and therefore, people are comfortable carrying this product around since it is not heavy. Computers and smartphones have batteries that do not keep the charge. The wrist-reader has a battery that can last up to five days. This ability to save energy can help solve the problem of failing to view time or surf the internet due to battery shutdown.
The product also seeks to address the problem of reading e-books. The target market needs to access information from e-books and using this product it will be easy to access these sources and therefore help increase speed while reducing costs associated with accessing these services. The product will also allow the target population to use one product to get many services. It will, therefore, be easy for the users of the product to access these services at once (Calegario, 2015).
Emerging markets
There are three emerging markets that this company can launch its product. They include China, India as well as the United Kingdom. China is a country that has a high potential due to its large number of population as well as high economic standards of living. The country has a population of 1.35 billion people 269 million being youths. China has a standard of living of about $9900. Various benefits can be realized by the company if it decides to launch its products in China. China’s currency the Yuan has high strength against the dollar. This characteristic makes this country an attractive place of doing business. In case this company decides to invest in China, there is a high likelihood that it will reap more compared to other countries due to the stability of the currency. The establishment of economic zones in China has shown that the country is welcoming to liberalization which is a good indication for foreign investors. The state has implemented many economic reforms that are likely to be welcoming to foreign companies. It is easy to find money to invest in China. This situation comes due to monetary policy that is loose therefore making companies access capital in a secure manner. China has been on the forefront advocating for consumerism. This step indicates that those companies that will be based in China will have the privilege of serving customers freely and this will allow them to reap significant benefits. China’s population are moving to the middle class, and this step would ensure that consumers use more of their income every day for purchasing goods and services (Cavusgil, 2016).
India is another country that has a high potential, and Smart101 company needs to consider this emerging market too. The country also has a large population of about 1.25 billion people, and this provides a large customer base. The political environment of India is stable, and this can provide a conducive environment for the company to carry out business successfully. Further, India is a country that is growing at a very fast rate. There are many natural resources in India, and they can be very helpful in reducing costs. The country has a great market that is untapped, and this allows companies to invest in this country to realize the benefits from these opportunities. India has fewer protectionism policies, and this opens the door for many foreign companies to invest in this market. Cheap products can work well in this market since the country has high levels of poverty. Smart101 needs to ensure that its product is affordable tin this market so as to see better results (Stevens, 2013).
Brazil is another emerging market that can be utilized by this company. Brazil is a country that has a high potential for growth since it has characteristics of both developed and developing countries. It has not qualified to be in the developed country category. This country is a good place that the company can launch its product. Brazil’s population is about 200.4 million and the youths account for 16.5% of the total population. Brazil is a safe country that offers security to foreign investors. According to Marquis (2015), the Brazilian economy is booming, and this has attracted a lot of foreign investors. Loans are accessible for companies that want to start subsidiaries in Brazil since the National Bank of Development offers loans at a low borrowing cost. The Brazilian market is expected to have a growth of about 7%, and this growth can translate well to foreign companies intending to invest in this country. The country has many regulations especially when a business intends to establish a subsidiary. There is a need to use other alternative methods of market entry in this country since it would work for Smart101 Company (Dinu, 2016).
The chosen market that Smart101 company will internalize its product in the Chinese market. There are many advantages of launching the product in this country. China is a country that has many benefits including its population which presents a lot of potential customers. China is also a country that is welcoming to foreign investors since it intends to satisfy its population in regards to what they want. The country seeks to benefit from technologies that are bought by foreign firms, and for this reason, it is easy to enter this market since there are few restrictions. The company considers this country to be having many potential opportunities that are untapped and it is crucial to ensure that the company benefits by exploiting them. The reason for selecting this emerging market is due to its ease of establishing businesses in that country. There is a great potential for the company’s products to receive good feedback since when the product is known it can increase returns. The country has companies that are good in technology and partnering with such can help in marketing the product and therefore increase demand for the good (Gupta, 2016).
Entry strategies
There are various international market entry strategies that Smart101 company can utilize. Direct export is a strategy the company can use in reaching the Chinese markets. In this strategy, the company will market and sell the products to the client directly. This strategy allows the smart101to deal with the customer directly. There are no middlemen involved, and this strategy helps in increasing returns. Additionally, there is a significant likelihood of having better relationships with the client since the company will be dealing directly with them. The good of this strategy is the fact that the company does not have to get a store or location in the foreign country since the company delivers goods directly to the client (Hollender, 2016).
Another strategy that the organization can use is partnership and alliances. The company can decide to form an alliance or a partnership with another domestic or foreign company based in that country. This strategy can be very helpful in assisting the Smart101 company to enter a foreign country. According to Shaw (2015), forming a partnership with another company can provide technology, capital, market access as well as expertise that the firm cannot afford on its own. It is vital for the company to consider this option. Choosing a business that offers goods or services that compliment that of Smart101 will be an excellent step in reducing costs. The partnerships or alliances help in combining marketing efforts such that the two companies’ products are advertised thoroughly to help in making the products known in a foreign market. Successful strategic partnerships require commitment and time so as to develop a lasting relationship and confidence with the local firm. When the company has a strong presence in the local market, it can assist a new company to enjoy the boost of the local company. The another advantage with strategy is that it can be used in maintaining a high level of control over the business. Control is important as it helps a company shape its vision and what it intends to do in the future (Manova, 2013).
An online presence is a very critical strategy. The company needs to create a website that can help in advertising the company’s products. The website is also a good platform for the enterprise to interact with customers in the foreign markets. The use of social media sites can be very helpful in ensuring that most of the foreign countries population are aware of the existence of the company. The advantage of this strategy is that it is less expensive. It ensures that the company achieves a market presence and that the business serves its customers. Social media sites would be very useful when used as an entry strategy as many customers are present in these places especially the youths. According to Manova (2013), the use of these online platforms would act as a marketing strategy to the target population. Modern strategies can be very effective in making sure that the company’s products gain popularity in the foreign market so that it can start offering its goods to customers. Many companies have used this strategy, and it has worked in ensuring that a company sells its products to people that are in a foreign country. This approach has allowed a company to know how customers respond to its product before setting a local subsidiary.
Risks and benefits of each market entry strategy in each country
There are various risks and benefits that are associated with the market entry strategies that will be applied by the company in the company in launching the product in a new market. The market where the company will be venturing in is in Brazil, India, and China. These market entry strategies are unique, and they will all require the use different market entry strategies for the process of the product launch to be successful. These factors are important in determining how well the product will be received in the market. There are various factors that determine the entry strategy that will be perfectly suited to be used in an entry to a certain market. These factors considered in the entry strategy in most cases may result in an increase in the cost, but the expectations are that the sales will offset the increased costs (Marquis, 2015).
Direct exporting is one of the strategies that will be used by the firm in launching the product in the Brazil. The reason for the use of the direct exporting strategy in the Brazil is the fact that the cost of the establishing a firm in the region is relatively high. Smart101 Corporation will ensure that it has selected the best agents and distributors that will represent the company in Brazil market. The agents and the distributors will be working closely with the parent company that has its headquarters in the US. They will act as the representative of the face of the company to the users. There are various risks that are associated with the used of the strategy as the major marketing strategy. One of the main risks associated with the approach is the credit risks (Stevens, 2013). The operations are expensive because the company will be tasked with providing all the services in the Brazil market ranging from advertising, customer service, labeling, translation, and marketing among others. Foreign exchange risks may also be a risk that the company will have to endure while operating in the region. The firm may also suffer from the differences that are present in the legal requirements for operating in the market. The legal requirements of operating in Brazil are in a way strict than operating in other regions. The legal requirement and compliance to the regulations in the area are a matter of great importance, and the country takes that serious especially for the foreign firms operating in the region (Morschett, 2010).
The benefits that are associated with the application of direct exporting as is the political stability in Brazil. The political environment in Brazil is calm and operating in the region will not be a problem. The demand for the product in the region has been increasing. The population of Brazil is big thus will offer a ready market for the exported products hence increasing the revenues obtained from the sales. The country is also known for its availability of the funding sources which will be an added advantage to using the strategy. The strategy will also ensure that the firm has found the best distributors who will be used for that purpose. The proximity of Brazil to the US may serve as a benefit in operating in the region because that is a factor that might reduce the costs that are incurred I the transportation of products to that particular market thus boosting the sales (McGovern, 2016).
The another market entry strategy that will be used by the Smart101 is the online strategy. This strategy would have been of significance in venturing in the Indian Market. The online market entry strategy has become one of the strategies that have emerged to be strong in the market. Companies like the Amazon.Com are multinationals that have prospered through the use of the approach. The approach requires setting up a website whereby buyers will be required to shop online. The buyers are required to use an online portal where they will register and link to their credit cards to ensure that they will be capable if paying for the product as well as view the specifications and important features in the product. The online presence as a market entry strategy is a risky undertaking that will require thorough planning. One of the risks that will be associated with the use of the strategy in conducting business in India is the threat of being hacked (Dinu, 2016). Hackers have become a threat to the firms that are operating online thus using their technical know-how to siphon money from the company or the customer. Another risk that is associated with the use of the strategy in India is that it will limit the use of the site to the individuals who are computer literate. The product is best suited for everyone and limiting the sales to the people who have knowledge in the computer will be an act of reducing the customer base in the region. Transportation will be another risk that is associated with the use of the approach in India. The company will be using a lot of funds to make sure that these products have reached the customers on time without delay (Yin, 2016).
There are many benefits that will be derived from the use of the strategy in India is the availability of the demand of the product in India. India has a population of about 1.2 Billion people that will be enough market for the company to prosper. Therefore, the expected revenues are expected to be huge considering a huge percentage of the population will be in need of that product. The legal and the political environment in India are favorable thus they will not have an impact on the operations of the company online (Cavusgil, 2016). Another benefit that the company may realize through the use of the strategy is the reduction in the costs that could have been incurred in construction or leasing a production plant. The strategy is cost effective and in most cases efficient since most of the clients receive the products they have ordered at the comfort of their home. This move will guarantee an increase in the market share since the customers will not be required to travel for distance to come and buy the product. The firm will ensure that the product has been taken to the consumers without delays. The company will also be using the strategy through using the social media as a tool for marketing. Facebook and Twitter are social media platforms that have a huge following thus will provide a better opportunity for the company to market its products. The sites can also be used as an avenue where the company can be informing the customers of special offers and discounts to the customers (Niedermeier, 2016).
A partnership is the most appropriate entry strategy that will be used by the Smart101 to get into China market. The strategy will entail partnering with an existing firm like Lenovo. The partnership will be appropriate because Lenovo is a technology company that has been in operation in China for a long time. The option of using the strategy will, in the long run, prove to be beneficial to the company especially in the advancement of the Wrist-Reader. Some of the risks that might be associated with the use of the strategy may be the terms of the engagement with the Lenovo (Morschett, 2010). The firm that the Smart101 will be partnering with in China might request for huge share that will have an effect on the percentage revenues obtained. The management of both companies that are partnering may be different thus bringing about conflicting views that might not be good for business. The legal environment in China for the partnership with a domestic partnership may be costly and complex for a new business to handle. Being a startup, theft of the technology might be easy and costly for the startup to pursue the matter legally. Foreign exchange risk may also be an issue that may have effects on the operations of the company in China (Stevens, 2013).
The benefits of using this strategy in China is the fact that the cost will of setting up a new firm will have reduced. Lenovo is a well-established firm and may allow the startup to share resources with them. Another benefit of selecting China is the availability of market. China has over 1.5 billion people. The population will offer a ready market to the company. Further, most businesses around the globe go to buy products in China for resale in their domestic country. Operating in China will have positioned the firm in a global position where the product will be distributed in different countries. The cost of production in China is relatively low. Additionally, China is endowed with cheap labor and raw materials that are used in the technology industry. Demand for the product in China is high. The political and legal environment in China are favorable and will contribute to the success of the startup in China (Rothaermel, 2015).
Risks that Small Firms may face in China
Operating in China presents a set of challenges especially to the small businesses. One of the risks that a small business may face while operating in China is the differences in the business culture. The culture of business in China is different from the business culture in the US. Therefore, most of the businesses fail because they attempt to use the business models they have been using which in most cases prove to be futile. Businesses are required to adjust to the business practices of China as means of overcoming the risk. Cultural differences are risky and adjusting to fit into the market since most of the practices in the market do not seem to conform to the international standards that are acceptable.
Human Resources is another problem that likely affects the operation of a small business which is a startup in China. The issue human resources are risky because the human resources in China are accustomed to the hierarchical structure as opposed to the US which has flexible authorities and delegates responsibilities. Therefore, the management may have difficulties in managing the human resources in China because they have been trained to take their initiatives and always follow instructions (Rothaermel, 2015).
The emergence of unfair market practices is one of the risks that small firms may have to encounter while operating in that particular market. Most of the firms in the region have been accused of unfair practices in pricing and also theft of patents which are issues that have a negative impact on the success of the small firm. Counterfeiting is also another unfair practice that is exercised by some firms in the region thus affecting the profitability of a small business. These are practices that may cause a startup to close of be driven out of the market. The risks should address to guarantee the success of small firms.
Communication and cultural differences pose a risk of operations of a small firm in China. Language barrier is not good for business they in most cases affect the running of small firms in China. The conflicting cultures of the West and China may hamper the success of the firm in the region because of inability to effectively communicate foreign business practices and other factors that contribute to the success of a small firm (Shaw, 2015).
Recommendation
China is the best market that will be chosen for the establishment of a startup because it is a favorable environment for conducting business. China has been a region where many companies ranging from startup to multinationals have continued to thrive. Setting up a company in the China market will increase the chances of prosperity.
China is the most suitable environment for a startup to thrive because of the availability of raw materials, labor, and the cost of operation is relatively low compared to other regions. The government intervention is limited, and the market is stable with not political unrests that are very harmful to businesses. Finally, the process of licensing and patent rights is an issue that is respected in the region thus making the region suitable for the launch of the product in the region. The projected sales of the product in the first year of the launch is expected to be 200,000 pieces which are expected to yield about $ 1.5 billion.
Conclusion
In conclusion, establishing a startup in international market can be very challenging. Smart101 is a startup that is planning on establishing and launching its wrist-reader, which is their new product, in an emerging market. The issue that the product will resolve is making sure that people can read e-books easily, access internet fast, and search for information online quickly thus saving time. The three emerging markets which are to be decided upon are India, Brazil, and China. However, based on the market strategy used, China has proven to be the only market where the startup will thrive. China is the most suitable market because it has availability of ready market, cheap labor, and the environment is favorable for startups.
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