Before making business decisions it is essential to carry out an analysis of important aspects that determine success. This paper discusses the important aspects that are necessary before getting into a new business venture. This analysis is vital for expansion which is the next move by our company. The first part of this paper presents an analysis of the expected environment of the new market for luxury boats in which the business expansion is to be undertaken. It commences with the PESTLE analysis followed by the analysis of the market in terms of competitors, company and industry analysis. The strengths weaknesses, opportunities and threats of the business have been identified. The second part highlights the mission statement of the company and how generic marketing would be undertaken. The entry mode into the new market has also been identified. The use of the Four Ps in the marketing mix has also been explained in detail. The last item concerns the financial implementation of the strategy followed by the concluding remarks.
Introduction
Our company seeks to expand to other countries due to the saturation that has been witnessed in the local markets. Before making this decision, it is vital to have an analysis of the major aspects of the targeted market. Political, Economical, Social, Technological, Legal and Environmental analysis. Before venturing into this new business it is important to first all explore the environment in the preferred market to establish the realities which exist in that particular market. These realities have been adequately dealt with in the following.
PESTLE analysis
Taiwan is an island that is found on the east coast of China between the Philippines and Japan. This island has an area of 13,900 square miles with a population of 23 million people. Most of the people living in Taiwan had their origin in China.
Politically Taiwan has enjoyed political stability for a long time and this provides a conducive environment for business investments. Being a democratic state it has two major political parties, The Kuomintang (KMT) and the Democratic Progressive Party (DPP). All the administrative divisions within Taiwan are under the control of the Executive Yuan. The political situation in the country has facilitated a lot of foreign investment activities that have seen the country to its current economic status within the region. The current political situation in Taiwan supports business and foreign investment. This is expected to continue and even become more in the future due to the government’s commitment to development and economic growth. There have been no incidences of civil strife or war in Taiwan that can threaten the establishment of our business in Taiwan. Since it is a haven of peace then definitely it is sound for business growth. (Aguilar, 2006). The current and future taxation policy of Taiwan is favorable for the establishment and growth of businesses with different products in this particular market.
Economically Taiwan has come from agricultural productivity into an economic power that produces electronics and ICT products. Taiwan in 2007 had a GDP of $383 billion. Because of hard work and good economic management, Taiwan has been able to come from the underdeveloped agricultural island into prosperity of being the producer of high technological products. Taiwan is a creditor economy which is holding a large stock of foreign exchange reserves. Taiwan has enjoyed sustained economic growth for instance in the year 2002 it was ranging between 3.5% to 6.2% per year. This economic growth has been driven by the foreign trade that has continued to occur in the country.
The economy is export oriented and continues to be influenced by fluctuations in the world economies. The current economic status of the country will allow easy access to loan facilities and this would help much in meeting our business development objectives especially after operations would have taken off. Therefore economically Taiwan is a better option for investing in our new luxury boats because of the foreign trade and other important factors that will promote our business activities. (Bureau of East Asian and Pacific Affairs, 2008)
From a sociological perspective Taiwan has well established social institutions such as educational institutions, religious institutions and cultural institutions that offer good interactions that are vital for trade. Their language which is Mandarine Chinese is a very important social aspect that is used throughout the nations and makes communication within business very easy. Therefore Taiwan from a social point of view is a good environment for this particular venture that is concerned with luxury boats. Taiwan is not a country that has so many ethnic groups and religious affiliations, therefore the current situation would not bring out serous implications to our business since it would be easy to co-exist peacefully with the few ethnic and religious differences that are in existence. (Bureau of East Asian and Pacific Affairs, 2008)
Technologically, Taiwan has embraced technology and that is the main reason why it is one of the leading producers of electronic products such as computers. Such an environment would be favorable for our business because ICT facilities are very much required to enhance efficiency in all the operations the business venture would be involved in. For instance Online business with potential clients would be facilitated by these facilities. The cost of these facilities is expected to be considerably lower based ion the location of the market in Taiwan.
A legal analysis of Taiwan brings it out as a market where there are legal protections for both the consumers and the investors. According to the bureau of East Asian and Pacific Affairs, 2008, the most recent enactment in Taiwan is the Trade law which has allowed the country to go on with its open market policy while at the same time protecting the country from unscrupulous businesses from outside especially with cheap products.
For instance the law calls for sanctions and punitive tariffs for countries that tend to sell their products in Taiwan below the cost price. The law brings Taiwan in line with the international trade practices for instance like those of GATT. Therefore this implies that such a nation offers legal protection to trade activities and therefore it will be favorable for the new business. The policies and laws of Taiwan concerning employment would be much in line with our business and specifically the labor intensive policies would even reduce costs on labor. With the current state of affairs we do not expect trade barriers to be imposed on our company for operating in Taiwan especially by China.
Taiwan has various environmental policies that regard to products use and their effects tot the environment. Our new luxury boats are not expected to cause environmental effects and therefore the environment of Taiwan would be ideal for the production and sell of our products. (Bureau of East Asian and Pacific Affairs, 2008) The fact that this market is near a water mass makes the environment perfect for our products. There will be no environmental hindrances towards the establishment of the new business in Taiwan since the climate of the country has been looked into and it has been revealed that it is conducive for business. Just as an example no incidences of calamities have so far been reported in this country. Therefore it is still a safe environment for investing business.
Globally our investment in the Taiwan markets with luxury boats would not have many implications since the country already has an open market policy. This is a good environment for out business. The people of Taiwan would not have bad attitudes towards our products since there is no environmental effect associated with boats. We do not have many expectations in terms of future legislations affecting the environment in which our business would be operating under. This means that the business would not be affected so much in terms of future legislations that would concern the environment. (Bureau of East Asian and Pacific Affairs, 2008)
Therefore this PESTLE analysis clearly depicts the current and future situation of the kind of environment in which our new business will be expected to operate under. This shows that Taiwan is a good market compared to other countries which have very risky environment under which new business and the existing ones are forced to operate under.
Market analysis
Taiwan is a big market and out of the 23 million people we expect at least 12 million to be consumers of our new product in this particular market. This is a considerable market size that can enable the company to achieve the targeted sales volumes. With a per capita GDP of $16,790 the purchasing power of the people in this market seems not to be low and this is a very important factor for measuring the potentiality of this particular, market. A higher purchasing power means that within a few years of establishment the company would have achieved growth in terms of increased sales volume and market share in Taiwan.
The rates of unemployment are also low showing us that this market has more potential of pushing the company and the boat products to even greater positions in the industry. The growth rate of this particular market is expected to increase over time basing on the current population growth rate which stands at 0.39%.Taiwan can be said to be a profitable market because of a number of reasons. First of all, the buyers will have power to enable the company to have increased sales volumes and this will translate into profits. This is based on the statistics of the GDP of this particular market which in 2007 stood at $383 billion. The company will also have a strong supplier base that will help in achieving the expected profitability (Aguilar, 2006).
Profitability in this market is also expected to be high because there are no barriers to the entry of the new product. Since Taiwan has an open market policy we do not expect to encounter barriers to the entry of our product and this is very important in predicting the profitability of the new market. Companies which are already in Taiwan are not offering the same luxury boats as our company. This means that we do not expect the threat of substitute products in this market. This does not mean that there shall be no threat but it is important to state that such a threat will be minimal and will not hinder the business from achieving its targets in the market. Taiwan as a market has regulations that govern trade activities therefore we do not expect to encounter obstacles in this market resulting from rivalry that might emerge from other industries. We expect to co-exist in good relations with other industries within the same market. In terms of distribution channels, (Cunningham, 1986).
Taiwan as a market have channels that link directly to the consumer and this is a very important strength of this market since there will be no problems that are associated with channels that are not directly in link with the consumer. The company also has the potential of developing new distribution channels in future that will help to improve its competitive advantage. Finally in the analysis of this market we do expect changes in Taiwan market. These changes will be relevant in the sense that they will bring about new opportunities and also threats to the industry. This would make the company to be on toes and embrace the new changes in the market for the sake of prosperity and future growth. Therefore after analysis of the market it is essential to underscore the fact that Taiwan is still the better option for marketing the new luxury boats because of the foreseen opportunities that exist in the market. (Cunningham, 1986).
Competitor Analysis
There are a number of competitors in the Taiwan market who are important in our marketing strategy. The two major competitors in the boat market in Taiwan are Alexander marine and President Marine Ltd. These are the two main producers of boats to the Taiwan local markets. It is important to note that both competitors are not focused on achieving short term financial goals. Therefore we do not expect them to spend a lot while in their attempt to respond to our competitive attack. The main worry here concerns the two competitors engaging in destructive price competition and this will see all of us not making profits. The two competitors are meeting their objectives and it is not expected that they might change their strategies. President Marine has tried in the past to introduce new boats in the same market but they fail to take off. Therefore they still assume that the market is still unstable for the same type of boats. This will help us to introduce the new luxury boats and I believe I t will take as very far. The assumptions the two competitors hold about their position in the industry will be of an advantage to us. This is because we shall capitalize on this weakness to come up with better strategies in the market and disapprove them of their position in the market. (Gordon, 1989).
The two main competitors in the Taiwan market have been rated basing on the key success factors in the industry. The table below gives a summary of the ratings
In the above table competitor number one is rated higher than competitor number two. This will make the management of our company to pay the necessary attention to competitor number one according to the scores in the above table. The two competitors in this market have resources at their disposal and we expect them to counter our competitive attack using the resources. After careful evaluation it has been found that the competitors will not react swiftly to the changes that will be taking place.
The are expected to take longer before responding to the changing environment.
Company Analysis
After careful assessment of the current situation in our company basis on a number of facts it is vital to mention that the company is better placed to implement the new strategy. The financial position of the company is not bad based on the existing assets of the company. This company during the last financial year managed to record a pretax profit of 40%. This is a clear indicator that the company has the capacity to invest more into the industry and introduce new attractive products that can revolutionize the entire market. Besides this assets the company is also in a better position to get loans form various lending institutions and this will assist in the implementation of the new luxury boats in Taiwan. The new business strategy can fit well within the budgetary plans of the company. In terms of human resources, our company has adequate manpower that will be helpful in implementing the new products in Taiwan. A Manager would be appointed to oversee the planning and implementation of the strategy in the market. There are adequate resources that would be used for advertising and other important marketing activities such as promotions so as to ensure that there is enough publicity of the new luxury boats. ( Hill, Westbrook, 1997).
The analysis of the company shows that this company has the capability of effectively introducing anew brand of boats in the Taiwan market and thereafter competing effectively so as to establish a new position in the boat industry. I do have the confidence that this company has the potential of competing effectively with the new product in the Taiwan market.
Industry analysis
Analysis of the boat industry in the target market is very important so as to understand what should be done towards acquiring a position in this industry. The position of our new luxury boats in the boat industry will be determined by what happens in the industry and other boats from the different competitors. This is a very competitive industry and the quality of the product in the industry would tend to give the product a competitive advantage over other products. The price of the new luxury boats and its quality would be fundamental in securing a position for the product in the industry.
There are a number of forces that would be actually fundamental for our success in this industry. (Michael,1998).
First of all, the suppliers in the boat industry can be said to be having a higher bargaining power. This means that doing business with such high power for bargaining would be profitable to our company. Our products will be moving at a faster speed with such suppliers. The success of our new products will also be facilitated by the high bargaining power of the buyers in that particular market. This is because most of them are employed and are earning. This means that they will have higher purchasing power and this will see our sales volumes increase with time. In this industry there is no threat that would emerge from new entrants.
And even if they come we shall have secured a better positioning the industry such that the new entrants will not be a threat to the profitability of our product in the industry. In this industry we already have substitutes in the market some are even cheaper than our main competitors. This would be a threat to our boats but we shall always work towards improving our quality through various strategies to reduce the threat posed by the substitutes. There would also be the threat emanating from the rivalry that would come from the other competitors. This is because all the competing boats would be straggling to secure and maintain a position in the industry. Therefore rivalry is a thing that cannot be avoided. This shall be countered using the appropriate tools and ensure that it does not hinder the company from achieving its goals in the industry. After a critical analysis of the boat industry, it is important to mention that the new luxury boats to be introduced in Taiwan have the potential of becoming the best boats in the industry if all that is required for this challenge is done from the part of our company. We have no doubt that this can be achieved through hard work and commitment towards the success of the products. (Cunningham, 1986)
SWOT Analysis
This is a very important process in the market analysis for this new product because it identifies the strengths, weaknesses, opportunities and threats that exists in the course of marketing our new brand in Taiwan.( Hill, Westbrook, 1997).
Strengths
First of all our company is not new in the boat industry, it has been in business and has earned a good reputation from all over the world. Most of our consumers like our products and continue to recommend them to those who have not discovered the secret in their high quality. Our company has a clear track record and expertise in production of modern boats. The luxury boats products are enjoyed in other countries. This has been the case for the last 10 years since its establishment. The company was voted last year as the best company that has continued to demonstrate social and corporate responsibility. This shows that we are not only interested in profitability but also give back to the community. The company has the best customer care team that has helped the company to win the confidence of most consumers because after interaction with the staff most of their needs have been satisfied.
Weaknesses
The impact that some of our products has had on some consumers in the event of misuse or failing to follow user instructions. This has led to discouragements by some cultural and religious practices especially with their negative feedback.This now limits our product to particular market segment therefore the full potential of the market is not explored.
Opportunities
Our company is well established and has the capacity based on the available resources, to enter the market with new products and emerge victorious with profits as the consumers already have a liking of our products. The existing marketing team is excellent and is capable of coming up with more competent products and even help to improve the existing ones through their innovation and creativity. We have a marketing team that compares to no other company in the industry. If their innovations are put into practice this can lead to better outcomes in future.
Threats
There are already competitors established at the local level.
The company has a big task to do in terms of marketing so as to convince the consumers that indeed the value of their money is in our new luxury boats. This would take a long time before the anticipated fruits and ripped from the entire strategy. There is also the threat of counterfeit products which can come after the product is gaining momentum in the market. Bearing in mind that Taiwan would be a new market it will be a difficult to finish this threat if it emanates from the competitors. (Hill and Westbrook 1997)
Mission statement
Since its inception in 1997 this company has continued to be outstanding in the boat business. We have a wide collection of boats that are known in most of our markets worldwide. The company’s diversity remains an important factor to delivery quality products to all our esteemed consumers in all our markets.
Generic
This will also be a very important aspect in our marketing strategy. It will focus on marketing for all in the sense that the message will be sent out concerning the whole sector that is involved in the production of similar products in the same market.
Our marketing strategy shall also endeavor to market the drinking of beer in general and not necessarily for our own brand only. This generic marketing would be beneficial to the entire sector in terms of creating more awareness on the product. (Korey, 1986) This marketing would be directed to the wholesalers, retailers and other distributors who are very important as they interact with the consumers of the new product in the market.
Therefore the slogan below shall be used for this overall marketing of our product and other related products even those belonging to our competitors. “Making boat ride a wonderful experience”. This would mean that all the boat companies have products that are tailored to suit the consumers.
Market entry mode
The best option for entering the market would be through a joint venture mode. This is so because it has been observed that the strategic goals are converging while on the other hand the competitive goals are diverging. There is a high sales potential with this mode of entry into the market. The high sales potential would be of competitive advantage to our new boats t in the new Taiwan market. This entry mode would be instrumental in overcoming the cultural distance that may arise in the target market. With this type of entry still, the company would spend less in terms of the resources that are required to get into the new market. The company would be viewed as an insider in the market therefore this would also increase its competitive advantage in the same market. However with this mode of entry into the market, would be of more risk than the other modes of entry like the exporting mode of entry. Therefore basing on the fact that the advantages of this mode of entry supersede the disadvantages, I would prefer that the company uses the joint market for its entry into the Taiwan market. (Korey, 1986).
Market mix
This will be a very essential tool for defining our market for the new brand in Taiwan. The marketing managers will use this tool to try and generate optimal response from the target market. The following is a description of how the product, price, place and price will be used in the marketing strategy.
Product
It is vital to understand that in this particular market all the products are good and they are still selling themselves out to the consumers. Keeping this in mind, it is obvious that our new luxury boats would not be an exceptional. Our new product would be tailored to suit the various consumers in the market. Its quality would come out uniquely and this will be used to distinguish it from boats of the competitors. By addressing the issues raised by the consumers concerning the product quality and usability, the product would be able to market itself in the market and would be able to achieve increased sales volumes. The characteristics of the new boats would be clearly defined by the marketers to the consumers so as to put out any doubt that may present itself in the consumers. This would be crucial in winning the confidence of the consumers. It will make them like our product and it is expected that the loyal ones will use the characteristics to recommend the new product to their friends. This would help much in increasing the customer base thus increased sales volumes. (Borden, 1964).
Price
Price will be a very sensitive aspect of our marketing strategy because it will influence the consumer’s behavior. The appropriate price for this new luxury boats would be arrived at basing on a number of factors. This would in turn reflect the value the product will have in whatever the amount the consumers will put in buying the product. The price will also consider the other products in the market to ensure that the price would be competitive in that market. Discounts and special offers shall be provided to consumers to attract them. This is because even though the price fixed may be competitive, some consumers are normally sensitive to such allowances on the price. Depending on the value of the product permanent competition on the price will not be our priority. (Borden, 1964).
Place
The place refers to the exact location where the products in the market will be found by the consumers. It can also be said to be the distribution channel for the new boats in the market. This shall comprise of the physical store where wholesalers and retailers will obtain the products before reselling them to the consumers. These locations are very critical in the sense that if the consumers miss out the products at these points they might begin to develop bad attitudes and this would not be going well with the marketing. The company shall struggle to ensure availability of adequate stocks at the various locations to avoid shortages especially. Availability of the new boats in the stores would be significant to achievement of our marketing objectives. The place therefore will also contribute towards increasing the competitive advantage of our new product. (Borden, 1964).
Promotion
This will be the way in which we shall be communicating with the consumers regarding to the usefulness of the product. Advertising will be carried out using the print media, T.V and radio advertising. The messages shall be made very attractive and attention grabbing so as to ensure that the target consumers are well reached and influenced into buying our boats. We shall also get into sales promotions whereby we shall have a chance to interact with individual consumers in the market. This will be an important forum for us to emphasize on why consumers should insist on our luxury boats because of the advantages associated with them. We shall also incorporate good public relations in the course of promoting our new products. This promotion is expected to impact on the consumers and hence influence their buying habits. (Borden, 1964)
Financial implementation
Before undertaking the financial implementation exercise it would be essential to carryout an analysis of the implementation plan. This would involve presenting a feasibility evaluation of the capital program. Another thing would entail a practical match of the appropriate amounts to be used in various areas and the various sources with the planned use of the amounts. This would be well taken care of to ensure that each sector of the financial implementation plan receives funds according to the allocations in the main budget. The allocations to the various items shall be undertaken with a number of considerations in mind to ensure that there are sufficient funds for all the divisions in the financial plan. The financial implementation shall be undertaken in three phases. The first phase would be the short term phase which shall have a detailed because of its significance and weight. The intermediate phase and the long term phases shall be summarized because their urgency is not same as the first phase. (Anderson, and Coughlan, 1987 )
Conclusion
Basing on the overall analysis that has been undertaken above it is important to note that the new market would be a better option for the expansion of the business internationally. The PESTLE analysis presents a clear picture of a conducive environment in the market that can be utilized to earn the company profits that have never been witnessed before in its history. The market has been analyzed and can be said to have great opportunities which have not been exploited so this can be a nice chance for our company to get into the market and emerge with victory. It is important to emphasize on the need for the decision makers in the company to pay attention to all the aspects of the market that have been discussed in this report. This is because the information that concerns the market was obtained after a thorough research into the target market. For the new venture to succeed in achieving the desired objectives all the important aspects of the market must be incorporated in the overall decision making process. Though the market might be having one or two threats, it is important to always look at the opportunities that that particular market presents to the growth and prosperity of our company. Therefore this particular market should be treated with the seriousness it deserves because it is capable of taking the position of this company to greater heights in future.
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