Introduction to International Business Strategy
International business strategy is a plan which provides guidance to diverse commercial transactions while operating business in the international market. There are number of strategies that can be adopted by business in order to accomplish objective of the company. Current essay focuses on diverse market entry strategies that can be used by management of Sun Hung Kai Properties (Mellahi, 2006). With an assistance of different market entry strategies the company can easily expand its business in Ireland. Moreover, there are number of factors which are required to be considered by the business while expanding business
Formal and Informal Implications
There are number of formal and informal strategies that can be adopted by management of Sun Hung Kai Properties while expanding business in Ireland. In this respect, it can be said that company can focus on formal strategy to enter in Ireland market. Foreign direct investment is one of the beneficial strategies to expand business in international market. In addition to this, it can be said that with an assistance of various formal and informal strategies the business can expand its opportunities in different geographical areas. Formal and informal strategies of business expansion cover different aspects and frameworks that need to be followed by management of Sun Hung Kai Properties while expanding business in Ireland. In regard to formal strategy, it covers different aspects of transparency and discernible adjustments to accomplish organizational goals. On the other side, informal strategy needs effective understanding of learning processes and requires various experimental activities.
The most effective corporate strategy for Sun Hung Kai for the Ireland market is service differentiation which will support business in delivering effective services in the field of real estate. Further, this can assist company to grab growth opportunities present in the market and in turn situation of rise in competition level can be tackled easily by company. Apart from this, to analyze external environment of Ireland PESTLE analysis has been carried out which has been shown below:
Government of Ireland has developed many laws which company has to comply with. Further, real estate market is highly regulated and laws such as appropriate infrastructure along with quality standards have to be followed by business strictly.
The current economic condition of Ireland is not favourable as inflation and recession have adversely affected entire market. Therefore, this has influenced purchasing power of people also who are living in the society. Sun Hung Kai has to consider economic condition of nation at the time of targeting its customers.
This factor is associated with trends and overall requirement of customers in the market. Sun Hung Kai has to develop buildings as per requirement of its customers in Ireland market (Andersen, 2007).
Every business operating in the market of Ireland employs advanced tools for carrying out operations. So, it is necessary for company also to work with latest tools for enhancing productivity.
Government has introduced various laws linked with payment of duties and taxes which Sun Hung Kai has to comply with so as to operate efficiently in the market.
It is well known fact that real estate companies have adverse impact on surroundings and due to this reason it is necessary for company to focus on range of techniques through which adverse impact on surroundings can be reduced to extent.
Market entry strategies
Different market entry strategies are present which business can undertake with the motive to enhance its overall performance in the market. Further, the ranges of strategies present are joint venture, FDI, franchising, exporting etc. It is not necessary that every strategy may be beneficial for business. For company like Sun Hung Kai operates in retail sector and for the expansion of business operations in the new markets it is necessarily required to adopt effective strategy with the motive to operate efficiently. In short selection of effective strategy can provide long term benefits to the business and operations can be easily carried out in the competitive market.
Joint venture is one of the significant market entry strategies that provide better opportunity to business while dealing in international market. It is considered as a business agreement in which the parties agree to develop various activities in the collective manner. Joint venture organizations can control activities in collective way so that they can share revenue, expenses and assets in the equalized manner. It is also well known as strategic alliances among business organizations because number of companies sign strategic alliance agreement while entering in new market (Buckley, 2008). In addition to this, it can be stated that joint venture organization is combination of two or more investors who share ownership and control over business. In addition to this, it has been spotted that joint venture strategy provides ability to share risk in the market. It also provides joint financial strength to business so business organisations can attain better opportunities. Key disadvantage of the joint venture is that partners do not have full control of management. Differences in perception of partners can also influence the expected benefits of the business. It may create consequences for the business so management of business organisation must ensure about cultural and social aspects. By considering this strategy it is possible for Sun Hung Kai properties to operate efficiently in the new market being chosen for expansion. No doubt market of Ireland provides large number of opportunities to business and through joint venture opportunities present in the market can be grabbed easily. Firstly organization has to identify range of real estate firms which are already operating in the market of Ireland. By entering into Joint venture with them it is possible for business to attract its target market in efficient manner and can assist to grab growth opportunities also.
Moreover, it is well known fact that setting up operations in the new market requires large amount of investment and considering joint venture as a strategy supports in reducing risk of high investment where Sun Hung Kai properties can jointly allocate funds for carrying out overall operations. Apart from this, the overall level of risk associated with conducting operations can be reduced by jointly operating with other company. No doubt businesses operating in real estate sector have to employ advanced technology for carrying out overall operations. Therefore, by jointly working with other firm latest tools can be undertaken by organization for boosting production and this can have positive impact on the brand image of company.
Furthermore, foreign direct investment is also one of market entry strategy that can be adopted by Sun Hung Kai Properties. It is considered as a system in which ownership controlling is in the hands of the business enterprise while operating business in the international market. In includes various activities such as merger and acquisitions which can boost opportunities for the organization (Geltner, 2013). With the help of this, market share can be improved to a great extent. One of key disadvantage of foreign direct investment is that entry of MNE can impact the displacement of various un-organised small businesses available in the market. It requires high ratio of investment in machinery and intellectual property to operate business in an effective manner.
One of the main advantages which Sun Hung Kai properties can obtain through foreign direct investment is that it is possible for company to gain access to expertise and there is no need to hire more staff for conducting overall operations. Further, business can easily share the risk associated with high leverage and can have favourable impact on the overall operations being carried out. On the other hand there are some shortcomings of this market entry strategy which involves it is difficult to manage communication with top authorities and other members being present within the workplace. Apart from this, poor tactical decisions directly create misunderstanding in between the employees who are carrying out overall operations for the welfare of business (Herrmann, 2006). Therefore, in this way undertaking foreign direct investment as a strategy to enter into the market of Ireland will have positive along with negative impact on business. It can allow firm to sustain in the market for longer period of time and can assist in grabbing growth opportunities.
As per the structured study of various market entry strategies, the management of Sun Hung Kai Properties can focus on foreign direct investment strategy while operating business in Ireland. With an assistance of FDI, the business firm can easily capture high ratio of market in Ireland so that business can have better opportunities. In addition to this, it can also be stated that the FDI provides effective accessibility to infrastructure and technology. It improves the overall efficiency of the process and helps in competing with multinational subsidiaries. Moreover, easy accessibility to the human resource is also one of key benefit that will amend the success ratio of Sun Hung Kai Properties while operating business in UK. It also provides well designed infrastructure to business that reduces the cost of new infrastructure set-up. Better outcomes can be provided to customers in form of improved services.
In addition to this, it has been identified that Ireland’s economic system is one of the fastest growing systems in Europe. It means that direct investment in Ireland market is beneficial for Sun Hung Kai Properties. It has also been spotted that top fortune businesses are also establishing their operational branches in Ireland because it creates a better opportunity for social and economic growth. Foreign direct investment strategy will allow management of Sun Hung Kai Properties to expand business in Ireland and provide support to economic growth. FDI is also one of the significant contributors to Ireland economic performance in the past recent years. It means FDI in Ireland is the beneficial strategy for organisation. Company will create various employment opportunities in Ireland which improves its present condition in the new market. Sun Hung Kai Properties can also provide better taxation to government of Ireland that also increases opportunity for organisation. It motivates government of Ireland to render better support to organisation in its expansion activities (Mattoo, 2004). Moreover, every year FDI is increasing its contribution in Ireland market by 5 percent that improves opportunities for social as well as professional development. In other aspect, with an assistance of FDI, management of Sun Hung Kai Properties can develop expansion opportunities in Ireland market as well as contribute in Ireland’s economic system.
Other than this, profit margin ratio of business can also be increased by accessing number of business strategies and technological tools. In this respect, the management of Sun Hung Kai Properties can acquire any real estate firm that is already operating business in Ireland market. It will improve the customer base as well as market share in the international market. By incorporating a wholly owned subsidiary, the company can also expand its business in the global market. It also covers key features of joint venture so benefits of equity joint venture can also be attained in an appropriate manner. It boosts the business opportunities for management of Sun Hung Kai Properties in Ireland market.
Furthermore, the horizontal foreign direct investment is one of the most beneficial sections for the organization. Management of Sun Hung Kai Properties can invest in the same sector of the nation in order to accomplish goals in an effective manner. In support of this, it can be said that the foreign direct investment is also advantageous for Sun Hung Kai Properties because it reduces the risk aspects in the international market. It also provides value addition to the work style and renders better earning to the firm in form of foreign exchange. It also helps in meeting social needs standards by creating number of job or employment opportunities in the Ireland. It is also beneficial for improving brand image while operating business in the global scenario.
As per the above essay, it can be concluded that Sun Hung Kai Properties is one of leading real estate Company that participate in diverse infrastructural development activities. Company provides high quality services and operate business in an ethical manner. It has been identified that there are number of market entry strategies that can be adopted by management in order to meet objectives. In order to expand business in Ireland, the FDI is one of the significant market strategies. Management of Sun Hung Kai Properties can adopt FDI in order to boost business opportunities in global market and lead business to impressive level of success
- Andersen, O., 2007. Internationalization and market entry mode: A review of theories and conceptual frameworks. MIR: Management International Review.
- Barry, F., 2003. Outward FDI and the investment development path of a late-industrializing economy: evidence from Ireland. Regional Studies.
- Barry, F., 2007. Fdi and trade: the irish hostâ€country experience. The Economic Journal.
- Benito, G. R., 2015. Divestment and international business strategy. Journal of Economic Geography.
- Buckley, P. J., 2008. Analyzing foreign market entry strategies: Extending the internalization approach. Journal of international business studies.
- Geltner, D., 2013. Commercial real estate analysis and investments. Sage
- Ghemawat, P., 2013. Semiglobalization and international business strategy. Journal of International Business Studies.