The growth and expansion of business functions and operations from one country to another country or countries is internationalisation. The number of advantages linked with this strategic approach are enormous but there are certain implications which need to be considered before implementation. Maxis Communication is a renowned private sector organisation that has been operating in Malaysia since 1993. This strategic position has been acquired by organisation with help of proper planning and implementation of all the business operations across the globe. The company provides services that are largely available for large, small and medium level busine
Canada is one of the best destinations or country in which business internationalisation process can take place. The conditions or factors which constitute external environment of businesses in Canada will be depicted in this report. Moreover, there are different analytical aspects which shall be explained in this assessment for gaining better understanding about the internationalisation strategy of the company Maxis Communication. The rationale behind choosing Canada as the target country is its diverse culture and greater acceptability towards new businesses. The overall gross domestic product and financial capabilities of Canada is viable for expanding businesses.
LITERATURE REVIEW AND CRITICAL ANALYSIS
Maxis Berhad is headquartered in Kuala Lumpur. The net income of this organisation is approximated to about 1.638 billion MYR i.e. in Malaysian currency. Telecommunications industry has witnessed drastic changes and growth in terms of demands from customer side. The reason behind this growth is introduction and integration of internet in the lifestyle of customers. Apart from voice calling and and certain communications products, the company also provides value added services to the customers. The internalisation process has been targeted to be implemented in Canada. The steps or aspects which have to be explored before executing the actual strategy include performing an analysis using PESTLE and Porter's Diamond model. This analytical information will provide the facts regarding business environment and market structure.
It is important to take precautionary steps rather than facing critical consequences without any planning. It helps in saving resources and also brings in more accuracy in the planned strategy. Hence, both the internal and external environment of the organisation is examined efficiently using PESTLE and Porter's Diamond model. The PESTLE tool helps in evaluating the influence of political, economical, social, technological, legal and environmental factors on the business operations. Stated that domestic markets when expanded on cross-country borders can bring in more profits and recognition for the company. Maxis being majorly dependent on the domestic markets can explore the opportunities it holds in foreign markets.
The government of a country plays a vital role in creating and implementing national policies. For instance, foreign trade policy, tax decisions and many other legislations. Business organisations especially private sector and multinational companies have to be aligned with these regulations and legislations. The impact of political stability or instability can be visualised by the level of economic developments in the country. Canada has recently addressed a major change in the political structure after Donald Trump was elected as the President. This has led to a shift in governance of the country which automatically affects changes in political decisions and strategies of business organisations (Bryson and Daniels, 2015).
Fiscal policies, unemployment rates, gross domestic products, recession and inflation are some components that form the economical factors of the company. Maxis Communications can face serious failures or consequences if there is a negative impact over the economic situation of country. Canada is functioning smoothly currently and there are no detrimental factors activated in present day scenario. Hence, internationalisation plan proposed by Maxis Communications can be easily developed and implemented as it would be economically more viable and feasible.
Social and cultural
Canada is a country that has an unnatural dominance of immigrants and their social and cultural attributes. According to (Cardoza and Fornes, 2013), cultural diversity brings is one of the strongest drivers of innovation. The significance of this factor as a beneficial component for the company, Maxis Communications can develop its new strategies for Canadian markets. Another component of this factor is health consciousness, career attitudes and population of the targeted regions. The estimates of profits and revenues can be acquired only when there is proper understanding regarding the social and cultural attributes of the target markets.
Marketing and production are two business operations which are deeply influenced by technological growth of a country (Carland Jr, Carland and Carland, 2015). For instance, some regions of USA are not in touch with latest technology as compared to Canada or Silicon Valley. This implies that internationalisation can be aided with help of technically advanced equipment and software. Company has to assess and identify the techniques that are currently used by competitors in Canada so that better strategies can be designed and implemented for aiding business settlement.
There are certain regulatory principles and frameworks which need to be followed by business organisations so that there are no legal complications. Health and safety, employment acts, equal opportunities, communal disparities and basic standards regarding consumer rights and advertising are some subjects which are important for consideration in legal factors (Cosgrove and Rijsberman, 2014). Maxis Communications is translocating from its domestic state to international standards. The actions that are considered as legal and illegal can be understood when legal factors are analysed effectively.
Over the past few decades, there has been adverse effect over the environment. Disturbances in ecology has created major climatic changes which led to global warming. Hence, the United Nations and several other non-profit organisations have developed environmental policies which needs to be followed by every organisation and human being (The Impact of Planning on Business Growth. 2017). Since, telecommunications industry involves use of radio waves, radiation concerns and ecological disturbances must be considered by Maxis.
Competition is quite tough in Canadian markets. Being closely related with the latest developments in information and technology, Canada is a country that has always attracted businesses that have deep routed links with innovation and development. Porter's Diamond model helps companies in developing a broader insight about the competitive advantage that beholds a market situation (Doiz, Lasagabaster and Sierra, 2013). Often government is perceived as a catalyst for enhancing the current position of nation in international markets. In case of Maxis Communications, it is important to perform a competitive advantage analysis so that perception of strategic position in international markets can be aided.
The national or international advantage can be acquired by a company when following determinants are in favour of the concerned business organisation.
- Firm strategy, structure and rivalry
- Demand conditions
- Related supporting industries
- Factor conditions
The position of Canada in global competition can be judged when aforementioned factors are deeply evaluated. Apart from availability of resources and favour-ability in trade, the clusters or groups which are formed in a particular market also contribute to the country's position of competitive advantage (Doloreux and Laperrière, 2014). The strategies and structure adapted by a firm play a major role in driving innovation and enhancing productivity. When more number of companies are involved in producing goods and services more innovatively then national advantage is acquired by the company.
The demand conditions means the customer demands which are directly hitting on economic growth of the country. According to (Friedman, Kahn Jr, Borning and Huldtgren, 2013), high quality products when marked at affordable prices can bring in more competitive advantage. This requires companies to extract most of their skills and efficiencies in attracting customers and making the market situation more favourable. On the contrary, (Gielen and Sansen, 2012) stated that demand conditions must be controlled so that improvements in strategies can be effectively implied. Local markets bring in more of national advantage as compared to international ones. Current position of Canada is stronger because of severe developments in the local markets and stabilised demands of consumers regarding upgrade in telecommunications services and products.
Every nation has their own set of factors which are formed due to availability of resources and technological base. Organisations have to access local resources for initiating their business processes (Gielen and Sansen, 2012). Any sort of disadvantage faced in the production of local factors results in forced innovation. But there are chances that this type of venture may not yield much profits. Hence, it is important to control factors especially the ones related with labour or resource scarcity. According to (Hall, 2013), enterprises flourish with greater speed when they are pressurised with shortage of resources and forced to bring in more innovation in their functioning.
On the other hand, related and supporting industries is the fourth dimension of Porter's Diamond Model. Maxis Communications has generate information regarding the telecommunications industry and all the companies that have been a part of this sector. Strategic planning process is supported by this information if utilised effectively (Harrison, 2017). Moreover, development of business in local markets is enhanced when knowledge about local competitors and supporting industries is complete. Henceforth, it is realised that according to Porter's Diamond Model, the internationalisation strategy is effectively implied and the probability of suffering losses is reduced. Moreover, country can access the conditions that are responsible for its global position in the competitive advantage scenario. Maxis Communications holds a better position in the domestic markets and Canada is near to competitive advantage in the international telecommunications market. This implies that amalgamation of this company with the target country can bring in huge developments in the telecom industry (Johanson and Mattsson, 2015).
Market entry strategy
There are different types of market entry modes available for Maxis Communications. The company can expand its business through setting up of partnerships or joint ventures, franchises, licensing and export-import trading. These are the basic modes of entry for the company (Knight, 2013). The choice of market entry strategy relies on the factors which turn out to be most favourable for organisation. There are situations in business cycles where all the concerned situations or factors are not in favour of the company. This often leads to failure of strategy. When planning is done, the entire business processes are scrutinised and respective implications are addressed. The time taken for setting up of a business in foreign markets can be recovered by bringing in innovation and qualitative options in the strategy planning process.
This is the process to enter in the foreign market this is essential for the company can operate the business for his separate name with the manufacturing goods and services. this include the brand name,manufacturing process,rate and operation of the company. It also require the monitoring training and renewal of the card in a during time period. It also protect the business to ensure the technology and production process. It involved the less investment and low labour cost involve the process.
It is the independent entity of the organisation is known as the franchisees it operate the business the name of another entity .it is the written agreement between the franchisee and franchisor (Leask and Bridge, 2013). The franchisor pay the fees to the franchisor. the franchisor provide the services to the franchisees like -trade mark ,oration system of the product,continued support to the advertisement of the product,training and resolution of the training of product which existing in the market. No experience require and training require for receiving the franchise. The market share are in the market they have not need for research and need of the market. The franchisee also comparing the big business for generating profitable in the market (Olejnik and Swoboda, 2012). The relationship of the stakeholders are their not require for the suppliers identity in the market.
Impact of market entry and development strategy on choices of the company
Once the mode of market entry has been decided, the consecutive step related with internationalisation is planning of resources (Achtenhagen, Melin and Naldi, 2013). Be it human resources or the finances, everything has to be planned and evaluated so that organisation will be able to perform business functions smoothly. For instance: considering the market entry mode as franchising. Maxis Communications has to hire agents and put on advertisements which will convey that company wants to develop its franchises in the target markets. Background checks and rigorous verifications have to be initialised which will help in establishing the links appropriately (The Impact of Planning on Business Growth. 2017).
When expanding the business in completely new markets, there is large amount of risk associated with franchising. But if executed smoothly, the profits related with this type of market expansion are immense. On the contrary, (Bangara, Freeman and Schroder, 2012) stated that there is involvement of third party in development of franchises. This implies that whatever profit brand name of Maxis Communications is earning will have to be shared amongst those involved. On the other hand, licensing is the mode of entry that doesn't involve any third party or external agent. Hence, the entire profit that is earned from foreign markets is completely under control of the company. This also implies that return over investment is more in licensing.
The impact of market entry on the choices of company is accessed in the form of selection of resources and planning of human resources. (Bryson and Daniels, 2015) stated that franchises have less human resource involved while licensing involves more requirement of human resource and other resources. Hence, it is important to make a strategic choice so that funds and finance can be planned effectively. Development strategies are of two types i.e. use of same or existing products in new markets while the other one involves use of new products in existing markets. There is another development strategy which includes a bit of risk because it indulges in launch of new products in entirely new markets. If proper planning is not performed in implementation of any of the development strategy then Maxis Communications can suffer severe losses.
The impact of development strategy is also deep routed over the choices of the company. For instance, Maxis Communications decides to implement product development strategy in Canada which implies use of entirely new products in new markets. Lot of risk is surrounded in this strategy but if successful, the company can gain competitive advantage. According to (Achtenhagen, Melin and Naldi, 2013), the resources managed by organisation can be effectively utilised when correct choices regarding selection of type of resource is correctly done.
Improvements are the basic steps for innovation. Companies can survive competition only when there is continuous improvement in the current markets with existing or new products. It not only helps in maintaining the existing customer share but also helps in managing operations efficiently. Customer satisfaction is the most important factor in both domestic and international markets (Carland Jr, Carland and Carland III, 2015). When brand loyalty towards the company is increased, the growth and development of company is stabilised. All these characteristic features are totally dependent on the strategy that has been opted by Maxis Communications for planning its business expansion in Canada. Moreover, these automatically regulate the choices organisation will make for selecting its resources and segmenting its potential customers.
Culture is based on the values and beliefs that are inherited by individuals from their ancestors. Different regions have varying cultures. The impact of globalisation and industrialisation on culture can be seen in the form of western or foreign influences. Immigration and movements from one place to another also results in the development of multiple cultural communities in one single place. Maxis Communications is based in Malaysia and the organisation tends to expand its international business in Canada. This implies that organisational heads have to plan out the strategies for coping with cultural differences at workplace.
The impact of corporate culture is directly felt on profitability and productivity of business. Employees are the basic elements that are responsible in forming corporate culture. Their mental abilities and acceptability towards people from different religions and communities brings in more open culture in the organisation. This reduces discrimination and helps in improving organisational environment. According to, the essence of a successful business functioning is totally dependent on the corporate culture of the company. Maxis Communications can outperform competition if these attributes are essentially the part of the corporate culture
- More emphasis on customers, investors and the profit margins of the organisation
- Adaptiveness to changes.
Canada has diverse set of individuals who belong to different cultural backgrounds. The company has to develop its corporate culture more efficiently for gaining a sustainable competitive advantage in the target markets of telecommunications industry (The Impact of Planning on Business Growth. 2017). Change management systems should be initialised for stabilising the cultural conditions of organisation. The impact of stable and likeable working environment is witnessed on the functioning abilities of the employees. Collaborations or joint ventures often fail due to lack of acceptance or adaptability towards changes. Hence, it is important that leaders and managers of the company should use effective strategies in making the organisational culture efficient for meeting goals and objectives.
Major advertising media used in the country
Canada has a vast media network which has developed and flourished with the technological advancements. There are different types of advertising media which are present in the country. Maxis can use digital marketing and social media as the prime methods of marketing and promoting its launch in the country. The most significant part of internationalisation strategy is promotional events and advertising methods (Gielen and Sansen, 2012). The choices Maxis will make shall have certain impact over audiences and potential customers. Hence, innovation with a purpose of transformation should be the blend on which business organisation should focus while developing advertisements.
The language that is used by all the advertising platforms is English. This factor can be quite challenging for Maxis Communications. According to (Friedman, Kahn Jr, Borning and Huldtgren, 2013), advertisements are like virtual representatives of the company that directly sell the product or service to target customers. Hence, it is crucial to select the right platform and medium through which proper communication can be developed with audience. Amongst the current advertising mediums used by business organisations in Canada, subscription and broadcasting are also primarily popular. This implies that Maxis Communications can use these for promoting its launch in the target markets and also help in developing communication links with potential customers (Leask and Bridge, 2013).
Social media marketing or digital marketing is also a significant development that has been witnessed currently. The use of internet and web based applications helps in approaching customers directly without any manipulation or interference from external agencies (Hall, 2013). Being the most cost-effective method of advertising, Maxis Communications can deliver the information regarding its strategies, products and services using popular social communities and websites. This shall help in reducing the initial costs which are involved in heavy marketing and promotional events. Gradually, the firm can take support of sponsorships and campaigning in advertising its products and services (10 Key Steps To Expanding Your Business Globally. 2015).
Risks are situations which can pose a threat in the near future. Every business organisation must perform a risk analysis for gaining insight over the problems that can pose severe threat in the future and affect firm's reputation (The Impact of Planning on Business Growth. 2017). While planning the internationalisation strategy, risk analysis is important to be performed. The findings of risk analysis helps in determining the precautionary measures that can help in avoiding severe consequences. The characterisation, communication and management of all possible risks in that are to be faced by the company is conducted in risk analysis.
The basic procedure of assessing risks is identification, evaluation, measurement and managing the risks. Impact of any business activity in the external or internal environment can be assessed with help of risk analysis (Knight, 2013). Business risks include instability, ineffectiveness in management, loss of funds, decreasing financial stability, etc. When operating in international markets, the level of competition affects business functioning adversely. For instance, Virgin mobile is one of the key competitor that has been dominating the telecommunications market from past few years. This implies there is continuous threat from this company to Maxis Communications.
The use of risk assessment or analysis will help in identifying the risks or factors that can threaten current functioning of the company. Leaders and managers have to manage activities and operations according to this identified risk by using appropriate skills (10 Key Steps To Expanding Your Business Globally. 2015). Lack of knowledge or information regarding the target markets, aggressive competitors and unfamiliar terrains are also some of the risks which can hinder progress or successful international expansion of the company. All these findings depict that risk analysis is an integral and important part of internationalisation for Maxis Communications.
Through this report, it is inferred that internationalisation is a critical process. The different aspects which are related with business expansion have been discussed in this report. Maxis Communications despite of being a leading organisation in Malaysia can fail in its strategic expansion in Canada. This situation can arise only when there is no proper analytical research provided. The findings of PESTLE and Porter's Diamond model depict that there are certain political barriers waiting for Maxis. But rest other factors influence or contribute to positive functioning of the company. Effective selection of the market entry mode and the use of strategies which enhance corporate culture can bring in more profits and stability in foreign markets as compared to unplanned decisions.
Hence, it has been realised from the above findings that risk analysis helps in managing threats easily. The different types of threats or frightening situations can be controlled and precautionary measures can be taken for ensuring smooth business growth. The complete analytical findings depict that Maxis Communications can expand their business operations by planning internationalisation in Canada. The opportunities and profits related with this project is plenty when considering business objectives of the company.
The various implications related with business expansion have been studied before. After deep evaluation, it has been recommended that Maxis Communications should perform deep investigation regarding the impact which will be addressed when operating in Canadian markets.
The strategy and business plan which is to be implemented must have objective, purpose, short term and long term goals. This will help in aligning the different functions with business objectives of the company. Moreover, it is advised that Maxis Communications should opt for licensing or franchising as the most suitable market entry mode because it will help in acquiring profits with whole and sole ownership. Since, no sharing of funds and profits will be engaged with third parties, the company shall experience more return of investment.
For acquiring a competitive advantage, the company needs to create better links and connectivity with audiences and potential customers. This is possible only when the products and services are of good quality and innovative. Hence, it is recommended that Maxis Communications should align its activities and strategies innovatively with technical advancements. This will help in establishing stronger links in foreign markets.
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