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HI2011 INTERNATIONAL AND GLOBAL BUSINESS 2018

ASSESSMENT DETAILS

Assignment 1 – Market Entry Strategic Report As individuals, students are required to select an Australian company as the basis of a case study. Once the company has been approved by your lecturer you will be required to prepare a detailed strategic report to management that analyses the macro-environmental, geopolitical risks and opportunities, as well as overall market attractiveness of entry of this company into BOTH a specific European AND Asian market.

Ideally your report will contain:
•  An Executive Summary
•  A brief introduction of the selected company
•  Identification of the TWO countries selected for market entry (one European and one Asian)
•  For each of the TWO countries provide a detailed analysis of:
•  The current macro-environmental and geo-political forces impacting that country.
•  Development of each country’s trade and business policy.
•  An assessment of the potential dangers, risks and opportunities in the current or short term policies of each country.

•  Conclusion – After evaluating both countries students must make a recommendation of which one is most suited for market entry, along with your reasons and justifications of why.
A limit of 2000 words overall (plus or minus 10%) is to be strictly observed.
Your report must include formal title page and Holmes assignment coversheet. Ideally the report will be presented in Arial 12pt font with 1.5 lines spacing. When complete students must submit ONLY an electronic copy Blackboard via Safe Assign (Self Check) and final submission links by the due date. The percentage matching on Safe Assign is expected to be less than 20%.
Students must also show adequate evidence of additional research with about 10 – 15 academic reference sources
provided.

Assessment Criteria:
•  Report structure, format, presentation, excellence (3 marks)
•  Application of Knowledge and course concepts  (4 marks)
•  Critical analysis and research demonstrated in country assessment (6 marks)
•  Overall conclusion and strength of arguments/ recommendations (4 marks)
•  Research quality and referencing (3 marks)
TOTAL WEIGHTING: 20%

Answer

1. Introduction 

In this study, Telstra Corporation Ltd has been selected for the development of a new marketing entry strategy report for the business expansion in two other countries. Telstra Corporation Ltd is a large telecommunication industry in the Australian region, which was established in 1975. It generally operates the telecommunication networks, mobile network connection, internet access, television network products and services. The main motto of the company is to spread their business in other countries to focus on increasing more customer base. The total employees as per 2017 report were around 32,000 and it serves their service a number of countries in the world (Telstra - mobile phones, prepaid phones, broadband, internet, home phones, business phones. 2018). The aim of the study is to demonstrate and identify the market strategies of Japan and Italy to help for generating the decision-making process to decide which country will be beneficial for market expansion of Telstra Corporation Limited.

1.1. Identification of the Two Countries

In order to construct the entire report of market entry strategies of Telstra, it is required to select two different countries from both Europe and Asia. The company is selected one Asian country, which is Japan and one European country, which is Italy to introduce their product and services by entering their market. The reason for selecting these two countries are the developing growth in technology and the population of both countries is suitable for the expansion of telecommunication business.

2. Analysis of Current Macro-environmental and Geopolitical Forces of Each Country 

Micro-environmental factors are those which create an impact on any business externally. Four factors are there commonly known as PESTEL (political environmental factors, economic factors, social factors, technological factors, environmental factors and legal factors) which are used to determine the business orientation as per profitability and productivity (Telstra - mobile phones, prepaid phones, broadband, internet, home phones, business phones. 2018). 

2.1. Macro-environmental factors

PESTEL AnalysisJapanItaly
Political factors
  • The power of the government or the emperor is        limited.
  • The constitutional monarchy is used to form        Japan’s government.
  • The unity of the people is more powerful in        terms of democracy.
  • Democratic and republic country
  • Multi-party system and followed by Roman law
Economical factors
  • Use the concept of free market economy
  • Follows the free capitalism of enterprise in        according to North American and British form
  • The overall economy is based on service and        industry.
  • Diversified economical industry
  • Many of the family run their own small and        medium-size business which maintain a high-quality goods
Social factors
  • Not the conservative ones in terms to accept        the various religion
  • The educational system of Japan creates a        significant growth in the country's economy
  • Almost 99% of the population speaks in their        own language (Japanese)
  • However, the students learn English in schools
  • Health care system of Japan is commendable for        the participation of the government and developing many policies        regarding health insurance to provide monetary help for everyone. 
  • Family-centric structure
  • The growth of the population is almost 34%
  • About 12.6% of the total population is        unemployed
Technological factors
  • Third largest country to use broadband services
  • Around 78% of people use the internet in Japan
  • The enormous growth in a technological area
  • Telecommunication of Japan is most fast and        attractive in terms of productivity and profitability in all over the        world
  • Pay more attention to technological sectors
  • Tied up with U.S.A to develop a new type of        sensor to increase the public utility purpose
Environmental factors
  • Unsuitable for accommodation and residential        usage
  • Inconvenient for the agriculture industry
  • The climate of Japan is not familiar as the        country has high humidity
  • The country is highly natural hazards prone as        the 10% of active volcanoes are situated there and almost 1500        earthquakes have happened in a year
  • The population of Japan is very high
  • Both the ecology and environment of this        country is very good
  • The atmosphere of this country pays a great        impact on business orientation
Legal factors
  • Legal factors are based on the European legal        system
  • The labor law of Japan is highly facilitated        according to the work culture of the country. 
  • Law for equal opportunities
  • Law for the safety of the products
  • Law for customer’s right
  • Law for harassment and discrimination 


2.2. Geopolitical forces of Japan: 

Geopolitical forces including three factors such as geo-cultural forces, geo-economic forces, and geo-environmental forces. Geopolitical forces indicate the all total factors in order to illustrate the business rules as per the government legislation, change in cultural aspect and operation in an economy of a country. Japan is a natural hazard-prone country which makes a big impact in business segmentation for an organization. The government of Japan is flexible and supportive in terms of trade and economic growth. However, the population of Japan becomes high and the percentage of the unemployment also becomes a higher issue in Japan. The overall business environment lapses for the unsuitable climate of the country which also impact on the industry plantation and availability of raw materials. Moreover, Japan with its bad climate, natural hazards and the high population growth faces geopolitical challenges in terms of maintaining the diversity of the economy. Furthermore, in a technological area, Japan becomes much better as a strong competitor for their aggression of high export business and develops the regional security (O'Grady & Morgan, 2017).

2.3. Geopolitical forces of Italy:  

The geopolitical factors of Italy are the high military protection in the border which is allocated to protect the country in terms of import and export purposes. The development in the technology industry of Italy has the high potentiality to compete with other countries. The climate of the country is suitable for residential purpose as well as the industrial development purpose. The availability of raw materials is high because of the geographical environment impact on its business industries (Ahmadi & Zamani, 2016). The government of Italy believes in democracy and thus the implementation of the business orientation has increased as per diversification of healthy administration of the government. However, the government of Italy can impose the tax up to 43% in order to the diversification of the challenging environment of the industries. The country is also strong in the logistic part and set some rules and regulation which are required to maintain by all the people of the country and also the outsider who have been planned to open their own business and take the advantages to become successful (Corrigan, 2016)

3. Trade and Business Policy 

3.1. Trade and Business Policy of Japan: 

The Ministry of Economy and Industry in Japan has organized and developed different agencies and bureaus to imply the effective workflow and distribute different policies to maintain the countries business culture well organized. The trade policies of Japan are divided both functional and geographical areas to consist the business infrastructure as well as the administrative responsibilities of the country. Usage of license for import goods are not mandatory in Japan, however, an import license is required in some certain products, such as fishery products, hazardous products, animal products and many more. The foreign investment of Japan attracts the other countries to collaborate with them for the reason of the total inward FDI stock JPY 24.4 trillion and JPY 35 trillion in the year of 2015 and 2016 respectively. The slight increase in FDI stocks indicates the economical upgradation as per business implementation. Some certain products such as, narcotics, firearms, explosives, and products which are against the violent property law are highly prohibited in the country. Furthermore, Japan imposes a restriction on the sale of certain products which are certain medicines, pharmaceuticals, agricultural products, and chemicals to mitigate the negative impact on the culture and economy of the country. According to Japan's custom act, some products are restricted and also verified and checked for suitability of import function before the shipment of the products and services. As per the agreement of WTO information technology Japan is one of the countries who have agreed to eliminate tariffs from most of the IT products. The consumption tax is 8% as per customs duties protocol. Thus the percentage of tariffs in Japan is basically low for the implementation of a set of regulations (Inaguma et al. 2017).

3.2. Trade and Business Policy of Italy: 

In the year of 2017, Italy was nominated for the 6th largest investors’ country in Europe. The charge of customs duties is applied to all the products which are imported into Italy. The value-added tax is added during the cost of the imported products and insurance, freight charges are also added. The general rate of the VAT is 22%, however, it reduces up to 10% on certain items. The FDI flows were raised about $17 billion in the year 2017 which indicates around 23% decrease in comparison to the last year. However, some investigations evaluate that the chances of the growth of FDI stocks will increase in next year. Italy has implied certain restrictions such as all the hazardous products, explosives, weapons, and war instruments require the export permits and an import license. As per EU territory, animal products are required to be approved by EU and it is also important to do systematic check before the entry in the country. Agricultural products which are imported like vegetables, whole grains are required to be tested by the Ministry of Health of the country. Trade and industries are very much potential in order to give a strong competition. The total imports from Italy have increased by almost 34% for mainly three items, which are machinery, vehicles, and beverages (Matsushita, Schoenbaum, Mavroidis & Hahn, 2015)

4. Assessment of the potential dangers, risks, and opportunities in the current or short-term policies of each country 

Country Dangers Risks Opportunities 
Japan
  • The charge of tariffs in Japan is comparatively        low from other countries
  • Charge high cost in an entry for the size of        the economy
  • Language is a most important barrier for        communication purpose for globalisation
  • Unstable climate and unsuitable environment for        industry
  • The growth of the GDP rate and GDP of per        capita income had fallen in the last several years
  • The rate of unemployment in accordance with the        total population of the country becomes low
  • The stock market rate of the country becomes        low 
  • Increase in overall industrial production
  • Increase in the rate of the export and import        operations
  • Increase in the mobile as well as the        technological industries
  • The rules and regulation of the government is        not complex and the charge of the customs duties and tax are        comparatively low
Italy 
  • The charge of the VAT is very high and also        depends upon the variation of products
  • Tariffs and rate of customs duties are        significantly high
  • Language and communication barriers 
  • Political barriers
  • Inflation rate impacts in economic growth
  • The suitable climate of the country
  • The unemployment rate has decreased
  • The rate of the GDP per capita has increased
  • The rate of the stock market has also slightly        increased


This section implies the overall dangers in the business environment in both the countries, total market risks which will indicate the future access of new business and the possible opportunities which helps to grow the mechanism in the market orientation. Telstra Corporation Limited is required to evaluate the business environment in order to extend the telecommunication business. As per the previous illustration, it indicates that the opportunities of Japan are high in comparison to Italy. However the competition is much higher in Japan for the huge improvement in telecommunication, on the other hand, Italy tries to develop in telecommunication which indicates the opportunities for Telstra as a new entry. Furthermore, the import and export barriers are much higher in Italy. The population of Japan is much higher than Italy which indicates the availability of market capitalization in terms of productivity as well as the profitability of the business. Moreover, the entire research work helps the Australian based company to extend their business to globalisation (Towle, Tolliver,  Bui, Warner & Van Dyke, 2015).  

5. Conclusion

In accordance with this study, it has been identified that Telstra Corporation Limited is required to extend their telecommunication business in Japan instead of Italy. The opportunities of Japan are much prominent in compare to Italy, as the growth of the telecommunication industries is vastly increased. The scope of the expansions is much higher for the availability of manpower and work culture of the country. Furthermore, the increase in mobile and network industries have increased in Japan and the utility and demand of the telecommunication industries have risen in terms of productivity. The government is much flexible and the restrictions are limited. Thus the company has been recommended to select Japan for expansion of their market and implement the strategies to become successful in the telecommunication sector. 



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