MGT530 Opportunities for ITSM and Its Expansion Into Papua New Guinea: Assessment Item 3 Answer
MARKETING OPPORTUNITY FOR INTERNATIONAL BUSINESS
This report primarily serves as an analytical study for the former assessment, which identifies the major strength, weakness, threats and opportunities for ITSM and its expansion into Papua New Guinea. This report investigates and evaluates the major strategies for expansion, such as the diversification and distribution strategies, along with the communication and the strategies involved in overcoming the barriers in international communication and more. In addition to that, the major competitive strategies such as pricing and promotion strategies are developed and evaluated for establishing the effectiveness in the strategies. Furthermore, the significance of the market entry strategy along with the scope of expansion, considering the external environment of Papua New Guinea has been discussed in this paper. Moreover, the potential issues in HRM for ITSM upon expansion into PNG have been identified. Lastly, the importance and considerations for R&D have been mentioned in this report as well. The report concludes that since ITSM operates in the IT industry, the expansion into an economically as well as socially backward country such as PNG may pose as a potential drawback for the country.The report further concludes that the average growth rate of IT businesses in the country annually is around 4%, which provides an opportunity for ITSM for expansion into the country. Nevertheless, the poor IT literacy rate of the country may pose a challenge for tperations of the company.
ITSM Corp is an Australian business organization that deals with the business solution to the different small and large size organization. In this situation, the organization is going to expand the business in Papua New Guinea. For this market expansion, the organization has to make some of the improvisations and modifications in the marketing plan so that the expansion of the business in this oceanic country can be successful. The main objective of this paper is to understand the different market opportunities for ITSM Corp in Papua New Guinea. In order to do this, different internal and external analysis has been done. In the basis of this analysis, further modifications can be done for these business organizations. Apart from that the considerations regarding the HRM issues and the recommendations will help the organization to get the strategic overview about the market of the Papua New Guinea along with maintaining the proper human resource policy for the organization.
Background of the Company
ITSM Corp is an Information Technology Service Management company that is based in Australia. The main objective of this organization is to provide a smart business solution along with the IT solutions to the small and large scale business organizations. The company was founded in 2010, and the specialization of the company is in the management of IT infrastructure (Itsmcorp 2019). The aim of the organization is to provide the best IT infrastructure management solution for the small and large scale organization in the marketplace. Apart from managing the infrastructure and IT solutions to the organizations, the service of the company also includes maintenance of the hardware, risk management in IT, hyper-convergence and management of the cloud system (Itsmcorp, 2019).
Apart from that, recently, the organization has adopted the Smart Grid system project that will allow the organization to provide solutions regarding the hardware solutions and management of the IT portfolio service. Apart from that, the cost-efficient hardware and the multi-vendor solutions are also provided by this organization.
Recently, the organization is planning to expand the business at Papua New Guinea. The expansion is going to be challenging as the IT expansion in this selected country is slow. However, there are certain opportunities for the organization to utilize the growing market situation. In this case, there are certain businesses, and marketing factors are needed to be considered for the organization.
The conclusion from SWOT analysis
There are certain factors that can be drawn from the SWOT analysis of ITSM Corp. SWOT analysis is done for the internal analysis of the organization. It can be said that the inner strength and the opportunities can be explored through the application of the SWOT analysis for the organization. In this case, it can be said that the main strength of the ITSM Corp is that the organization is emerging in nature and is doing well in the business and marketplace. It has been seen that all the clients of this organization are satisfied with the type of services the organization is providing (Itsmcorp, 2019). Apart from that, the organization has introduced the use of the new technologies and projects like Smart Grid those will allow the clients to get the services in a proper way. All these indicate that the organization will able to bring a positive change in the IT industry of Papua New Guinea.
On the other hand, the weakness of the organization is that though the organization is emerging in nature, the name of the organization is not well known in the market. In this case, gaining trusts of the IT-based businesses organizations operated from Papua New Guinea will be difficult for this organization.
There are certain opportunities for ITSM Corp for doing the business in Papua New Guinea. It has been seen that the government of that country has taken some of the initiatives through the collaboration of the other IT service providing organizations for the proper rise in the IT industry. The rise in the IT industry is 4% in this fiscal year, which is a promising growth for the market (Itsmcorp, 2019). ITSM Corp has the opportunity to acquire this growing market. Apart from that, it has been seen that only 30% of populations are indulged in the service sector at Papua New Guinea (BBC, 2018). In that case, the growing market will indulge more people in the service sector. This also indicates that the ITSM Corp will heat the proper human resources for the expansion of the business.
There are certain challenges that are needed to be considered a threat to the organization. In this case, it can be said that the growing market of Papua New Guinea will attract other IT service providing companies. Apart from that, some of the big names in the IT industry can also invest the money in the development of the IT sector in this country (Chang, 2016). Considering all these factors, there is a probability that ITSMCorp can get competition in the growing market.
In order to understand the market situation for the company, external analysis can be done. In this context, PESTEL analysis can be done for ITSM Corp to understand the probable market situation in Papua New Guinea.
Political: The political factors can influence the business of ITSM in Papua New Guinea. It has been seen that the demand in the IT business services has grown up to 4% and the government of this country has contributed positively to this growth (Hohenthal, Johanson & Johanson, 2015). In this situation, the government of Papua New Guinea is developing different IT projects with the collaboration of different IT organizations. In this situation, the good profile of ITSM Corp can help this organization to get a chance in collaboration with the government in different IT projects.
Economic: Certain economic factors will also indicate the chances or the opportunities for the development of the business for ITSM Corp in Papua New Guinea. The GDP of this country is 6.2% (BBC, 2018). However, constant growth in the service sectors and the increase of the IT-based services will help this country to achieve constant growth in GDP (Deresky, 2017). This will help the ITSM to invest properly in the marketplace of this organization. Apart from that, initially, there can be some problems at investing in the IT industry of this country as only 30% of the populations are in the service sector (BBC, 2018). This implies that the major portion of the population is into the agriculture business. However, ITSM can take certain initiatives for the development of the IT industry in this country and the use of IT for the development of agriculture can be achieved through this the initiatives of this organization. Figure 1 illustrates the growth of PNG between the years 2010 and 2018.
Figure 1: Economic growth in Papua New Guinea
(Source: BBC, 2018)
Social and cultural aspects: The social and cultural attributes of Papua New Guinea is different from Australia. Most of the people in this country are dependent on agriculture. Apart from that, the cosmopolitan culture like Australia is not very much adopted in this country. Apart from this, the literacy rate is not much satisfactory in Papua New Guinea (Deresky, 2017). In this situation, it would be a challenge for ITSM Corp to develop the start the business in this country as the organization may face problem in the human resource. However, proper initiatives taken by the organization can increase the computer and IT literacy rate in this country (BBC, 2018). Eventually, that will be reflected in the change of the job in the population. In order to do the organization has to take some of the steps such as educating the people with the computer courses. This will also be reflected as the corporate social responsibility for the organization. Figure 2 highlights the prediction and scope of growth for PNG until 2018.
Figure 2: Prediction for growth of Papua New Guinea till 2018
(Source: Noe, Hollenbeck, Gerhart & Wright, 2017)
Technological aspects: It has been seen that the use of technology in the different aspects of the industry is less for Papua New Guinea, as 30% of the population is into the service sector. Apart from that, the nation is highly dependent on agriculture and natural resources. In this situation, there is a change that is needed through the extensive use of technology in the different parts of the sectors in Papua New Guinea(Deresky, 2017).
Environmental factor: With the development of technology, there are certain things that are needed to be considered by ITSM. It has been seen that Papua New Guinea has rich natural and environmental resources. In order to develop, ITSM needs to maintain the environmental sustainability. In that situation, the organization can mitigate producing the e-waste. Apart from that, while maintaining the IT practices, the mitigation of energy consumption can be done by this organization in order to maintain sustainability (North & Varvakis, 2016).
Legal Factors: There are some of the legal factors that are needed to be considered during the development and the expansion of the business by ITSM in Papua New Guinea. The laws and regulations of Papua New Guinea are cooperative for doing the business. This will help ITSM to develop the business related to the IT infrastructure in a proper way.Figure 3 depicts the key division of taxations in PNG, which are to be paid to multiple legal as well as government bodies by companies operating within the country.
Figure 3: Payments to legal and political bodies by businesses operating in PNG in 2018
(Source: Huang, He & Chen, 2019)
Competitive Strategy Analysis
The market situation at Papua New Guinea is not competitive as there is less IT development in the country. Apart from that, this is a country that is full of natural resources, and the population of this country is largely dependent on agriculture. In this situation, the less competitive market will help ITSM to expand in a proper way. However, as the IT situation is developing eventually, there is a chance that other IT service providing organizations will try to develop the business in this nation in order to explore the new opportunities (Cusumano, Kahl & Suarez, 2015). In this case, ITSM can face some of the competitors. However, as this organization is starting the development of the business in the early stage, the company will gain some of the competitive advantages.
Figure 4: Factors to be considered in the competitive strategy of a firm
(Source: Cusumano, Kahl & Suarez, 2015)
The other possibility that can be happened in this situation is the monopoly in the market created by ITSM. As this organization is starting early in the market of Papua New Guinea, there is a chance that the major portion of the market is acquired by this organization. In this condition, it would be difficult for the other company to enter the market (Rosenfeld, 2017). This will not be a good situation for the development of the IT industry in Papua New Guinea.
Market entry option analysis and preferred option recommendation
There are different ways to enter the market of IT industry for ITSM Corp in Papua New Guinea. The company can enter the market as a single company and can provide the services to the small and large scale business organizations. This is the market entry option for the business model that is followed by the organization in Australia. However, the organization can enter the market of Papua New Guinea through the joint venture. In this case, the organization can go in a joint venture with the government of Papua New Guinea and can work in the projects and the processes provided and aided by the government organizations (Kotabe & Kothari, 2016).
It can be clearly said that the joint venture is the best option for ITSM Corp for entering into the IT industry in Papua New Guinea. It has been seen that the market condition of Papua New Guinea is partially known to ITSM. Apart from that, the business of the IT industry in this country is slow. In this situation, entering into the market as a single company would be a risk for ITSM. In this situation, the joint venture with the government of the nation would be recommended for this business organization (Connelly et al., 2017). The ITSM can handle the projects provided by the government, and the success of those projects will help the organization to make goodwill in the market.
Marketing and R&D considerations (including competitive strategy)
Marketing strategies include a number of activities by ITSM for managing the expansion into the foreign market. It may be mentioned in this context that communication plays a vital role in this regards. Papua New Guinea has its own language and is known to be culturally diverse. Therefore, catering to the target market requires a thorough understanding of the culture and demands of the same. One of the major marketing strategies to be implemented is the pricing strategy. Price elasticity is taken into account in this context in order to address the competitive conditions for ITSM as well as the income levels of the population of PNG (Michael, Storey & Thomas, 2017). In addition to that, it may be noted that predatory pricing is considered unethical as per the Australian Competition and Consumer Commission are also known as the ACCC (Hitt, Li & Xu, 2016). The regulatory body monitors the effectiveness of the pricing strategy for companies which are Australian in origin, expanding into other countries.
R&D consideration is highest and plays a crucial role in the development of new products. However, R&D considerations are more in countries which has an affluent population. It may be stated in this context that only 18% of the population of PNG, reside in urban areas and are exposed to the modernisation (Malysheva et al., 2016). Furthermore, ITSM aims at using a push strategy as it sells a commercial product, and it is important to identify with the audience of the target market. In addition to that, it may be mentioned that the use of communication through standard marketing mix have been considered for implementation. However, barriers in international communication have been identified in terms of a language barrier. It is to be noted that PNG has approximately 850 indigenous languages (Diao et al., 2016). Additionally, cultural implications play a crucial role as well, since a major population of PNG are confined to rural locations and are strongly attached to their cultural roots.
Recommendations regarding production
Production-related aspects in ITSM require through training of the recruits in Papua New Guinea. Since ITSM is an IT firm and as previously mentioned, only 18% of the population of the country live in the urban locality (Punnett, 2017). Thus, recruitment from the country would require thorough training sessions. In addition to that, it is to be noted that the communication strategies to be implemented have to be aligned with the culture and beliefs of the people of PNG. The distribution strategy requires the implementation of a proper and suitable channel for distribution. It may be stated that the quality of retail distributors is dependent on the development of the countries. Thus, focus on production and marketing through the distribution channels is important. The recruitment of IT experts and specialists for software development is essential. In case the production is done in-house, within PNG, the growth becomes slow (Windsor, 2019). However, in case the export of the technologies take place, the expansion is likely to develop better.
International HRM issues and considerations
Firstly, the compliance with the labour laws and concurrent legislation and frameworks of the country are to be taken into account. Recruitment of a culturally and geographically diverse population may be performed by ITSM while expanding into Papua New Guinea. However, considerations of ethics, as well as the differences in the cultural beliefs between the Australian and the PNG people, are to be analysed thoroughly, along with the development of adequate plans to address the challenges experienced (Cooke, Veen & Wood, 2017). Crafting newer HR regulations taking the cultural values are to be considered. Comprehending and maintaining HR issues in terms of cultural diversity in the target country have been a profound concern with respect to the HRM strategies. Furthermore, deriving profit out of the employees becomes a secondary concern, while the primary concern is related to the focus on the work-life balance of the employees. These concerns have been regarded as major international HR concerns, along with flexible work timings and more. However, the implementation of these HR norms has been found to be difficult under real-life local circumstances.
This report summarises the analysis of the strengths and weaknesses of the Australian IT company ITSM, along with the major factors involved in the expansion into another country. The country of expansion has been identified as Papua New Guinea, which a culturally and geographically diverse country in the Oceania region. It may be stated that since ITSM operates in the IT industry, the expansion into an economically as well as socially backward country such as PNG may pose as a potential drawback for the country. This has been identified by conducting a PESTLE analysis for the same. The social, political, economic, technological factors have been analysed for the country to evaluate the scope of expansion of ITSM into the country.It has been evident that the average growth rate of IT businesses in the country annually is around 4%, which provides an opportunity for ITSM for expansion into the country. However, the poor IT literacy rate of the country may pose a challenge for the operations of the company.