Brighton Mobile TV is involved in the manufacturing of TV sets that are installed in the cars and boats in the market of United Kingdom. However, with the augmenting competition, the organization has witnessed the business going down. The organization has not really achieved the economies of scale and hence does not enjoy a cost advantage in the market place. Taking this into consideration, the augmenting competition is becoming even a bigger challenge for Brighton. International business is a field that helps an organization in foraying into the international markets. The entry in these host countries can be done with the help of direct means such as organic growth, mergers, joint ventures etc or the entry form could be indirect in the form of exporting the products to the host countries. The international business activities may assist the organization to sell the products to the global consumers thereby gaining a high market share.
This research work will focus on understanding the reasons for the internationalization of Brighton bearing in mind the differences between the domestic and international business activities. This research work will also focus on recommending an emerging market to Brighton where the organization can establish its business activities. Lastly, the research work will seek to create a FDI strategy for the organization that may assist it to foray in the emerging market by highlighting the challenges that it is most likely to face in the near future.
During the course of this research work, the researcher will focus on secondary researcher. Hence, the relevant facts, figures and information to support the research work will be derived from the academic books, journals, magazines and newspapers etc.
International business activities for Brighton
As already mentioned, Brighton is not performing very well because of the heightened competition in the UK markets. Hence, following are some of the reasons because of which Brighton should enter into the field of international business. Firstly, the organization will be in a position to diversify its risk. This implies that the organization will be selling its products to the consumers of the host countries as well and hence the falling demand in the home country may not have a devastating effect on Brighton. If the organization only operates in the home country then regularly falling demand may even lead to a business failure and hence an international business strategy is recommended to the organization. Secondly, the organization will be able to create a better brand image in the global markets and hence the benefit of a global brand image may assist it to overpower the competing brands in the home country also. According to Azad (2009), it has been seen in the past that the organizations that operates in the global markets also enjoy an edge over the competing brands in the home country. This is mainly because they are able to create a better trust factor and are considered as experts in their field. The same reason may also drive Brighton to enter in the host countries.
Thirdly, by entering into the host country, Brighton will be in a position to maximize its number of customers, sales and profits (Mooij, 2003). At present, the organization is only operating in UK and hence entering the emerging markets may prove to be highly beneficial for Brighton during the turbulent times. Fourthly, the international business activities may also help the organization to gain the benefits of economies of scale. This is mainly because by operating in the host countries, the organization will also increase its production activities and hence it may provide the organization with the benefits of economies of scale. This, in turn, will enable the organization to become a cost leader in the market and give the price benefit to the customers as well. Lastly, another reason for entering the host countries and undertaking the international business activities is gaining a sustained growth (Aaker, 2000). Since the organization will be able to enhance on its business performance by starting its operations in the international markets, it will be in a better position to sustain its growth for a long time.
The main difference between the domestic marketing and international marketing for Brighton is the transformed business environment. The organization is already operating in the market of UK and is well aware of the entire business scenario, consumers, competition etc. However, in the host countries, each and every element of the business is new. Hence, it may become difficult for the organization to operate. The only manner in which these differences between the domestic and host countries can be tackled effectively is by adopting an adaptation approach. This is a business strategy under which the organization can make changes to its existing business strategies in reference to product, price, place and promotion as per the tastes and preferences of the consumers of the host countries. For instance, when McDonald’s entered the Indian market in the year 1996, it was not really aware of the Indian consumers and their needs. The organization introduced its famous beef burger in India. However, the consumers agitated against this decision because the Indian religion does not allow the people to eat beef products. Hence, the consumers boycotted McDonald’s. In the year 1997, the organization conducted a detailed research on the Indian consumers and found that approximately 60 percent of the Indian consumers are vegetarian (Blythe & Megics, 2010). Taking this into consideration, the organization introduced an entirely new menu for the consumers that had all the vegetarian products. This influenced the consumers to purchase products from McDonald’s and today it is one of the very dominant brands in the Indian fast food industry. This is a classic example of adaptation under which a multinational organization changed its entire product strategy to suit to the needs of the Indian consumers.
Recommended market for Brighton Mobile TV
It is a very evident fact that numerous emerging markets may provide an invaluable opportunity to Brighton to establish its business opportunity. According to Baker (2000), usually it has been seen that the multinational organizations first eye the developing countries as their business resources can be utilized in a better manner in these countries. This implies that the multinational organizations may not enter the developed country because of the already existing high competition in these countries. Similarly, the under developed countries may not provide a high market potential to the multinational companies in the form of consumer demand and purchasing power (Thorpe, 2012). Hence, numerous multinational companies have preferred the developing countries as they offer a high growth to the companies and enable them to reap the benefit of international business activities. Following is the 12 C’s analysis of six developing countries that will throw light on their market potential –
*The highest growth will be in M&E market in Asia-Pacific
** Japan currently has 3% of readership market
Sales potential: when calculating sales potential the following have been taken into account: price of product; amount of money spent on promotion; essential the product is to users; overall size of market; competition
Short-term opportunities: Japan ‘s highest readership will provide an attractive market, and its advanced economy; the easiest route to market; however vast cultural differences pose a challenge that needs to be addressed first.
Long-term opportunities: China, Asia and foreign markets that involve substantial product enhancements (language) and new distribution networks, opportunities for scale of economies and new manufacturing base for CA; localise manufacturing
Source: IMF report, 2014
Market attractiveness –
|Low Company strength High||
Invest for growth
Invest for growth
Invest for growth
Europe is stronger than America; Nordic Countries, Switzerland, Portugal all have avid readers similar to Japan showing potential for further growth; although print advertising is declining in Easter and Western Europe (19%, 26%) and USA 20% new opportunities may exist for digital media
Source: Azad, 2011
Taking the above figures into consideration, it can be very well said that India is one of the most suitable markets for Brighton at present. It is a much known fact that India is considered as one of the fastest developing economy of the world. Following is detailed PEST analysis of the Indian markets that will further throw light on its attractiveness for Brighton –
Political and legal factors – The present BJP government in India is highly in favor of FDI. Prime Minister Narendra Modi is very much inclined towards the growth of the manufacturing sector and hence there are not many political or legal restrictions on the manufacturing companies (Sharma, 2014). Such organizations can easily enter the Indian markets and start their business operations. However, the high taxation rates and a 33 percent tax may prove to be a little hurdle for Brighton
Economic factors – India is a fast developing economy that is growing at a rate of 9 percent and as per the government, this growth rate will be maintained for the next 2 – 3 years as well (Sharma, 2014). The per capita income and the purchasing power of the consumers are also quite high and hence Brighton might easily its product in India. According to a Nielson report (2013), the consumer confidence index is also very high for the Indian market
Socio cultural factors – India has favorable demographics that may provide the organization with a valid opportunity to expand in the market (Solis, 2011). The consumer demand for such leisure products is very high and they are highly inclined towards making a purchase decision from the multinational brands (Assael, 2002). Also, the consumers of India are considered as ‘innovators’ or ‘experimenters’ which is a positive sign for the company. This implies that the consumers are very much inclined towards experimenting with the new brands that enter the Indian market. It should also be mentioned here that the country of origin effect may have a positive impact on the consumer behavior in India (Azad, 2011). This implies that the Brighton is a brand from United Kingdom which is known as a developed country. Hence, the consumers in India may be highly inclined towards making their purchase decisions from Brighton as they will perceive the organization in positive lights.
Technological factors – India is considered as a technologically advanced country. All the basic technologies that are required in the manufacturing sector are easily available in India and hence this will not create any hurdles for the organization (Caywood, 2012).
Taking the PEST analysis into consideration, it can be very well said that India is one of the most suitable markets for Brighton to enter and start the business operations.
Challenges for Brighton in India
It should be mentioned here that Brighton may face several challenges in the Indian markets as well. Some of these challenges are –
Firstly, the organization has to understand the complex consumer behavior of the India consumers (Needham, 2012). In the last few years, different trends have been seen in the Indian consumers. Till 2006, it was seen that the Indian consumers are very price conscious and wants to purchase their products from an organization that offers at a low price (Sharma, 2014). However, in the last few years, it has been observed that the consumers are highly materialistic in their approach and focus on making their purchase decisions from well renowned brands even if they are available at high prices (Sharma, 2014). Going forward, understanding the consumers and their behavior might prove to be a daunting task for the organization.
Secondly, the heightened competition in India may also prove to be a big challenge for Brighton in India (Procter, 2000). It should be noted that Brighton is not performing well in UK because of the high competition and the organization may face a similar situation in India as well. In the past, it has been seen that the domestic competition in India may also undertake negative marketing strategies or flanking attacks on the multinational companies to spoil their brand image (Kotler, 2012). Although this is considered as unethical but it is a big trend in India (Crane & Matten, 2007). Therefore, this may also prove to be a big challenge for the organization. Hence, to overcome such a situation, the organization should have sound strategic management.
Thirdly, the relevance of the marketing strategies is very high in the Indian markets (Fill, 2002). This is mainly because the marketing strategies may enable a new organization to reach out to the target audience, spread awareness about their products and services, persuade them to make a purchase decision and remind about the products and services repeatedly (Ellwood, 2002). However, understanding the kind of marketing strategies in India in reference to the promotional strategies, segmentation, targeting, positioning strategies etc is a difficult task for Brighton (Slater, Hult, and Olson, 2010)
Lastly, the dynamic marketing environment may also pose a big challenge for the organization in the Indian markets. As studied during the course of this research work, the political, social, economic and technological factors are very much in favor of Brighton (Frost, 2015). However, these forces may quickly change in the short term as well and then it may create problems for Brighton. Hence, a regular marketing research is required to make sure that a regular track is kept on the marketing environment (Randall, 2001).
FDI strategy for Brighton
Foreign direct investment strategy is the process through which a multinational organization invests in the host countries. For Brighton, it is highly recommended that the organization should enter into a joint venture with an Indian organization such as the Future group, Tata, Reliance etc. Joint venture is a long term agreement between two companies under which the legal entity of both the companies survives and they agree to share the profits and losses that arise out of the agreement. In the last few years, the trend of joint venture has been very successful in the Indian markets. Multinational organizations such as Starbucks, Tesco and many others have invested in the Indian markets through the route of a joint venture. Hence, this format has proved to be highly effective.
The main benefit of Brighton by entering in a joint venture in India is associated with the comprehension of the technical knowhow of the Indian markets (Baker, 2010). This implies that the Indian markets are quite complex and hence understanding many elements of operations in India is quite a daunting task. However, if a big organization is in a joint venture with Brighton then it might become easier for the organization to comprehend the Indian markets and the manner in which the business strategies are to be undertaken. For instance, the local partner of Brighton can provide knowledge about the locations through which the selling of the products can be done or it may assist the organization in shaping the entire supply chain network for the smooth flow of the products.
Also, by entering into a joint venture, Brighton will not have to invest a huge amount of money in starting its business activities in the Indian markets. This is mainly because the cost will be divided between both the partners in the joint venture. This will reduce the risk of operations in India and may provide high sustainability to the organization. Lastly, a joint venture agreement may also assist the organization in getting a relief in the taxation systems. As already mentioned, the multinational companies have to pay 33 percent taxes to the government on their revenues. Also, the Indian legal system follows a double taxation system which is very hard for the multinational organizations to bear. However, by entering into a joint venture, such restrictions can be easily waived off. Hence, investing in the Indian market and entering through a joint venture with a local partner may prove to be highly beneficial for Brighton.
From the above discussion, it is very much evident that international business is one of the highly crucial fields for the organizations today. The domestic markets may get highly competitive or may get saturated and hence foraying in the host countries may assist an organization in gaining a sustained growth (Czinkota and Ronkainen, 2002). The same strategy has been recommended to Brighton during the course of this research work. It was found that India is one of the emerging markets that may provide an invaluable opportunity to the organization to expand. However, there are several challenges in the form of complex consumers, marketing environment, competition and many more that Brighton may face in India (Mooij, 2003). Taking this into consideration, it is highly recommended that the organization should enter into a joint venture with an Indian organization such as the Future group, Tata, Reliance etc. In the last few years, the trend of joint venture has been very successful in the Indian markets (Cornelissen, 2004). Multinational organizations have invested in the Indian markets through the route of a joint venture. Hence, this format has proved to be highly effective. Therefore, the same can be followed by Brighton as well to make sure that it is successful in its international business activities.
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