Assessment Task Details And Instructions
You have been employed to act as a consultant for Beegrip(Client) who is looking to further penetrate into international markets that it already has a presence in. The Client will provide additional company background information at the start of the project.
You are required to produce a 4000-word report for the Client highlighting the potential for further international business development. To produce the report, you are required to integrate theoretical knowledge (i.e. theory and models from the relevant modules on the programme), critical thinking and problem-solving skills to analyse the potential for the Client to further penetrate into international markets that it already has a presence in. You are required to undertake the following in your report:
- An assessment of the client firm’s readiness to further internationalise.
- Determine the suitability of the client firm’s product for international markets.
- Comparatively evaluate 2 markets that the client already has a presence in, in order to identify which market is the most attractive for the client firm to further penetrate.
You will be allocated either:
- China and Japan OR
- China and South Korea
- Critically evaluate the various modes of entry that are relevant to the client firm and recommend – with justification – the most suitable mode of entry that will enable the client firm to further penetrate into your recommended market.
- Review and evaluate any issues related to Ethics, Responsibility & Sustainability that the client may encounter when expanding into your recommended market.
- Review and evaluate any issues related to Cross-Cultural Leadership that the client may encounter when expanding into your recommended market.
Depending on the nature of the client firm you should review and evaluate any issues related to either International Marketing OR International Supply Chain Management OR International Business & the Digital Economy that the client may encounter when expanding into your recommended market.
1. Assessment of Beegrip’s Readiness to Further Internationalize
Beegrip, the specialist High performance anti-skid coatings systems, has since its formation in 2018 as a result of a management buy-out, become a key player in the Marine and Civil sectors.
With its flagship product Bimagrip®, the company continues the heritage of more than 25 years of success in areas that demand the very best (BEEGRIP, n. d. ). While global markets change and create new opportunities Beegrip plans to expand the global presence of the firm to attain more grounds in the newly emerging markets.
Source : (Ayemibo, 2023)
When assessing the organisation’s preparedness for international business, several elements must be taken into account when trying to review Beegrip’s position. The Critical 15Ps of Evaluating Internationalisation Readiness covers all the necessary aspects for this kind of evaluation, which include People, Place, and Product, etc. This is in line with the image shown below depicting the elements of “People”, specifically “Who”, “Where”, “Why”, “What”, “When”, and “Which” in business decisions making.
High level of internationalization is evident from the following factors that show that the company now ready to expand internationally. Beegrip’s current customers are from different parts of the world, which shows the company’s capabilities to function on the global market (BEEGRIP, n.d).
Ensuring quality and environmental standards the company has been accredited by ISO 9001 and ISO 14001 for participating in the global market (ASQ, n. d). These certifications not only guarantees the quality of Beegrip’s products but also shows its concern towards environmental issue that is becoming vital for any organization in today’s worldwide operations.
From experience, Beegrip has been operation and expanding since the management buy-out; therefore has the financial power to expand internationally.David et. al, 2014). The fact that the company has been in operation for some time and has dealt with many microenvironments worldwide proves its market acumen. This flexibility is important in so as to position the products and solutions to best fit the regional needs, which is one of the vital success parameters in the internationalization process (Hill, 2019).
However, developing new markets, especially in different continents like Asia in general and particularly China and Japan in particular is not without some difficulties. When launching Beegrip to the international market, the company will be faced with these challenges such as; legal policies, customers’ cultures and even necessarily changing its products and promotional methods
2. Suitability of Bimagrip® for International Markets
Beegrip has shown, with its 25 year track record of effectively combating dangerous anti-skid coating marine conditions through the Bimagrip® anti-skid coating system. Due to the material and some intrinsic characteristics, it is well suited to be used in performance demanding applications and environments. However, before Beegrip can consider its expansion into China and Japan, it should consider whether Bimagrip® is suitable for the international market.
Two sectors that are of massive size in both countries are infrastructure and a maritime industry of a country. The large population base, the increasing construction rate and infrastructural development in China provide the anti-skid system manufacturers an enormous market to tap into. This security approach of Japan on maritime and the quality of the industrial infrastructure of which is, also characteristic for Bimagrip®.
However, it will be interesting to have a look on the fact that to successfully penetrate into the markets, some changes may be necessary. As said by Leach et al. (2020) it is crucial to consider that the climatic conditions, building practices and safety standards are different across regions. Beegrip has been likely to adapt formulation of the product or the ways of applying it to local circumstances and requirements.
This competition is from local and global companies operating in each of the respective country. But to do so, Bimagrip® has to use its experience, quality, and positive outcomes as ways to establish a contrast. Using Porter’s Five Force model developed by Michael Porter 1979 would prove useful in evaluating the competitive forces of the market, perhaps through establishing the potency of supplier and buyers bargaining power, the threat posed by new entrant and substitute products, and the intensity of rivalry in these markets.
Especially, management must address issues relating to the complexity of the regulatory structures in the various countries where they operate. In line with these principles, Beegrip has to ensure that Bimagrip® conforms to all local safety and environmental legislation which may necessitated further accreditation or trialing (Blanchard, 2023).
It is possible to argue that familiarization with the existing cultural and business environment is critical to attaining market success. This encompasses sourcing for raw materials from local distributers and incorporating business culture which matches the country’s culture. The Japan Anti Slip Coatings Market report (2024) suggest future strategies need to place more focus on entering local business environments.
Thus, global opportunity for Bimagrip® is impressive and potential for China and Japan is particularly high, though the success crucially lies in Beegrip’s effectiveness in adapting to a new environment, following regulations, and adjusting itself to the local business manners and rules.
3. Comparative Evaluation of Markets: China vs. Japan
3.1 Introduction
Global Paints and Coatings Market Revenue Trends (2023-2032)
The Global Paints and Coatings Market is projected to grow at a moderate CAGR of 3.50% from 2024 to 2032, with the market size expanding from 198.34 billion USD in 2023 to 270.35 billion USD by 2032. This growth is driven by increased demand across various sectors including construction, automotive, and general industries. Key players like Nippon Paint Holdings, RPM International, and Asian Paints are focusing on innovations and advanced technologies to maintain competitiveness, while also pursuing market acquisition strategies through mergers, acquisitions, and strategic partnerships.
3.2 PESTLE Analysis
Figure : Self Created
Political:
- The Chinese regulatory environment is strict, rather stiff, and constantly changing making it expensive and less profitable to operate in the country.
- Japan’s legal sys-tems can affect safety standards and or environmental issues that may be a limitation on Beegrip’s future profit.
Economic:
- Another advantage is that in China there are new urbanization increases and large-scale construction projects which may help Beegrip to increase its sales and market share.
- There is a prospect for the development of robotics and vehicles in Japan since it prides itself in an advanced technology base and an emphasis on hi-tech production.
Social:
- Growing consumer concern over safety and quality in both markets is responsive with Beegrip product portfolio.
- There may be business cultural differences that will warrant a slight change in the manner that Beegrip will be conducted in the two markets.
Technological:
- Beegrip has a product called Bimagrip® which is ideal for use in China’s marine and infrastructure business sectors.
- The well-developed automotive and electronics industry of Japan presents potential uses of Bimagrip®.
Environmental:
- Environmental legislation regarding operation may change in near future affecting cost of operation and restrictions on imports in china.
- It may be an issue for Beegrip to alter its products and its processes so that they correspond to the environmental policies in both countries.
Legal:
- In China, there are many local companies which provide similar products and services to Beegrip and there is the danger of clone products affecting Beegrip’s market share and patent protection.
- These quality and safe manufacturing standards of the Japanese goods are a plus to Beegrip but might impose some moderations.
Here the PESTEL analysis of both markets has taken into account connectivity, political set up, legal environment, economic conditions and technological factors that may define the further penetration level of Beegrip.Therefore, the analysis shows that out of two available options, Japan is more suitable for further Beegrip penetration in the short to medium term.
The legal system of Japan present more stability to business where with its advance technological advancement and more concern on quality and safety standards that fits Beegrip high performance products. The representation of advanced manufacturing sectors for example robotics and automotive industry in presents a favorable environment to which Bimagrip® adapts well.
Moreover, Japan is already settled with legal systems and environmental standardization, which supports the idea that the legal environment in Japan is more transparent than other countries, which makes the operation of Beegrip more manageable despite the challenges.
3.3 Comparative Evaluation of China and Japan for Beegrip’s Expansion
Global Connectedness: China excels in the area of Global Trade by launching movements such as, Belt and Road Initiative, and got 16/16. When it comes to international trade involvement, Japan is frequent; however, the rate of involvement is less than that of China and got 12/16.
Political Environment: China has a centralised government that provides stability but inconsistent regulation, thus having a 10/20. Japan occupies the highest place and is characterized by a stable and predictable position of the political environment, which is 20/20.
Legal Framework: China has enhanced but still inadequate IPRs that receive 10/20, while Japan enjoys a comprehensive IP legal system and receives 20/20.
Economic Factors: China: Examining the opportunities reveals that there are abundant markets in this country; however, growth is somewhat slow, and the country’s internal issues give it a 12/16 score. The stable but slightly smaller market of Japan gets 10/16.
Technological Competitiveness: The South Korean tech savviness was rated 16/16 while China stood out in the areas of artificial intelligence as well as 5G while Japan performed better in the aspects such as robotics and manufacturing.
3.4 Conclusion
Out of both these countries China and Japan, Japan appears to be more suited for further penetration by Beegrip owing to its higher overall score due to political stability, a sound legal system, and possession of state-of-the-art technology even if China’s market potential is much bigger.
On the general scores, therefore, the implication is that Japan is considered the better ground for Beegrip to consolidate its penetration with a 78 against China’s 64. Japan has a low political risk; also the legal structure as well as the technology structure is developed in Japan thus making it safe to transact business especially in the long run.
China is again, another huge market for most firms and has experienced a relatively fast technological advancement but its political / Legal environment is relatively risky more so compared to its advantages.
4 Evaluation of Modes of Entry
4.1. Introduction
While screening the global markets for Beegrip’s expansion, Japan was perceived as one of the safest from a political perspective and was supported by strong legal systems and a highly developed technology as identified under Task 3. The use of one entry mode over another is therefore important in this particular expansion because it influences operational, risk and returns. This section gives an initial insight into some of the entry modes, assesses the best entry mode for Beegrip in Japan coupled with the overall market environment and its strategic direction.
4.2. Overview of Relevant Entry Modes
A. Exporting
Exporting could be easily used entry mode whereby Beegrip would manufacture the anti-skid coatings and export them to Japan. It is less risky in terms of financial obligation and involves small initial capital outlay that enables Beegrip tap into the Japanese market with limited resource commitments (Hill, 2019).
B. Licensing
Licensing means selling the authority on how to produce and market Beegrip’s products under Japanese companys brand name. By doing this, Beegrip is able to benefit from the knowledge of the local firm in its market and distribution networks, it also enables the company to enter the market with the least risks at the least amount of financial costs.
C. Franchising
Franchising is an extension of licensing, by which the local owner will make use of Beegrip’s brand and business format. This mode is mostly applied in the service industries; however it may be applicable for Beegrip if the firm is thinking of diversifying its services a round its products like application service.
D. Joint Ventures
In a joint venture it would mean that both firms would have an ownership as well as accept the risks involved in doing business together and also share the profits. This mode entails the product expertise of Beegrip and the market knowledge of the local partner thus providing a mid-ground to access the Japanese market.
4.3. Critical Evaluation of Entry Modes
A. Exporting
Exporting also gives Beegrip a low risk, and relatively cheaper market penetration strategy for Japan that retains manufacturing authority, and leeway while not requiring a tremendous amount of capital investments. It is suitable for the trial of market receptiveness without much resources investment (Hill, 2019).
However, exporting reduces control over the local operations; restrictive communication with customers and market flexibility. To that extent, it must be said that when tariffs as well as transportation costs are high this might lower the levels of profitability.
As exporting entails low risk, Japan’s cut-throat and sophisticated market however may necessitate the direct involvement for customer intimacy and quick response (Kotabe & Helsen, 2014). This mode has low risk, with modest market access as a drawback, therefore, cautions but restricted for Beegrip’s Japan venture.
B. Licensing
Licensing presents Beegrip a non-threatening market entry strategy into the Japanese market where a local organization will be able to produce the products for the company. This utilises local knowledge, speeds up the entry process and reduces invested capital, also lowers down the count of regulatory frameworks.
However, licensing results in less prof being made and also there is less control over product quality and its promotion which may affect brand image. There are many more threats, including those to the company’s intellectual property.
Licensing may work in Japan if Beegrip identifies a good local partner with a well-established local market presence that is in sync with Beegrip’s brand. However, there are potential risks involved with the theft of the intellectual property and the loss of control over it which means that potential risks must be respected and protected by law.
C. Franchising
Franchising, therefore, facilitates Beegrip’s rapid expansion in new markets through the use of local investors’ funds and experience. It allows the company to retain a certain degree of brand identity while tapping at local knowledge; it is a less risky a proposition than a fully-fledged subsidiary.
Some of the keys issues are; consistency of quality and brand image within franchisees. Related costs to train and support franchisees, fixed high cost at start up, operational control task challenges express major challenges.
As highlighted above a service company in Japan value quality and customer services therefore franchising could work for Beegrip once the company decides to diversify into provision of services. However, this would be possible only if the various franchises involved adhered to a set uniform standard which as stated by Kotabe and Helsen (2014) would be an exercise in managing.
D. Joint Ventures
Beegrip enters a joint venture with a Japanese partner so that both can pool risks and profits, as well as have the necessary information about the Japanese market, its customers, and regulations. This synergy breaks lay in the pairing of Beegrip obvious product virtues with the partner’s market savvy.
However, it is a common understanding of joint venture where many a times, there is likely to be conflict on management and sharing of profits where the partners are not well selected. Because of culture clash and strategic misfit, there are often conflicts of interest that threatens successes. Besides, this mode may reduce Beegrip’s operational control in Japan.
In this the market in Japan for Beegrip social capital would be a critical driver for their market success, however, a joint venture could offer Beegrip a much needed support for its operations in a complex and competitive market which is well protected by legal structures.
4.4. Recommendation and Justification
The evaluation of the critique suggests that a joint venture is the best mode of entry for Beegrip to undertake its Japan venture. This strategy supports the need to find local market and share risks as well as the need to retain a large operational authority.
Through a joint venture, Beegrip can obtain a Japanese partner’s distribution channels, approval mechanisms, and cultural receptiveness peculiarities that are highly important for this competitive Japanese market. Besides, the approach also helps Beegrip to minimize the financial risks linked with market entry while, at the same time, retaining significant control over the company’s procedures.
Based on Beegrip’s competence in product differentiation and quality, it meant that by partnering with a credible Japanese firm, Beegrip would get the appropriate support for meeting local markets needs without compromising on the Beegrip brand and quality.
4.5. Conclusion
Thus, it is clear that this research finds that a joint venture is the most optimal strategy that Beegrip should use in the quest to venture into the Japanese market. The joint venture will help Beegrip attain a relatively high operational control while at the same time helping the joint partners to minimize their risk.
This means that by partnering with a local entity Beegrip can gain close access to market knowledge, cultural understanding and existing business networks that would otherwise be unobtainable. This local knowledge will assist the company to deal with the different regulatory frameworks in Japan, behaviour of consumers and how to meet their needs and preferences respectively.
Also by partnering with a local company, Beegrip will help in sharing the financial and operational risks in a new market which is always a foreign market. This methodology can also result in a rational dispersion of the shared technologies as well as the distribution channels that will definitely bring down the overall operating expenses.
In addition, Beegrip can also increase its reliability in the market by using a local partner increasing its reputation among the Japanese clients and partners. In this way, Beegrip will be able to enter into the Japanese market smoothly, and will remain sustainable and competitive in the long-run. The joint venture model becomes practical and strategic for the company to enter this market since it comes with the advantage of scaling up while at the same time accessing local knowledge and resources.
5. Ethics, Responsibility, and Sustainability Issues
While operating in Japan, Beegrip has to be extremely sensitive to ethical, responsibility, and sustainability issues that are vital in the Japanese environment. The Japanese government has laid out stringent laws on Corporate Social Responsibility (CSR) and environmental management systems, which are the primary for companies that are aspiring to set foot into the Japanese market.
The Japanese laws demand high levels of environment compliance, labor relations and corporate governance in any business. Also environmental responsibility prevails as laws of Japan are strictly compliant regarding waste disposal, carbon di oxide emission, and resource utilization. For Beegrip this presents the company with challenges that require it to align its products and processes to these strict laws so that it can avoid the legal ramifications while it gains the trust of its customers (Wang & Yang, 2022). Non-compliance with these environmental needs could result in fines or loss of reputation.
Other issues concerning the business ethics are mirrored with the environmental issues; justice in dealing with the employees and customersis a major tonic upheld by the business people in the country of Japan.
This means that companies are supposed to do business while obeying some set of rules and should not engage in subjecting people to unfair behaviors. In other words, the company’s operations must demonstrate those ethical benchmarks, which means that Beegrip must be a good employer of its workers and an honest seller of products that do not harm consumers.
Through the implementation of CSR commitment and sustainability, Beegrip will be in a position to gain Japanese stakeholders’ confidence hence leading to long run effectiveness.
Staying consistent with the laws and the ethical standard set in the country will help in building up the image of Beegrip as a responsible company both nationally and globally. These factors are important and have to be comprehended and incorporated in order to form an effective business strategy in Japan.
6. Cross-Cultural Leadership Issues
For Beegrip to be effective when it is entering the Japanese market, cross-cultural leadership must be adopted when managing the firm. These cultural values include collectivism, frontline worker’s obedience to authority, and employee’s emphasis on working in groups. All these aspects have to be well understood and effectively adopted by the leaders of Beegrip in a bid to comfortably embrace the Japanese Business environment.
Collectivism is the key principle in the Japanese leadership culture. In this culture leaders are expected to seek consensus and to engage employees in decision making processes for the benefit of the entire group. Beegrip’s managers must ensure that significant decisions do not disrupt the employees; hence, the management must reach agreements through consensus.
This creates harmony and makes employees to understand and appreciate that they are valued in the organization. Work culture also emphasizes the importance of transparency within the leadership structures in Japanese organizations, as the subordinates demand that their leaders provide them with much information on aspects concerning the company and that they also be part of the decision making processes (Yu & Wang, 2019).
Hierarchical etiquette also plays a significant role in the Japanese business culture, where everyone is expected to honour his superiors. There are complex organizational structures that are featured in Japan and leadership styles have to comply with rank was traditionally respected.
In as much as these leaders are required to align with this hierarchical structure, they have to ensure that there is free communication between the team members regardless of the formality in the rank system. Both management and subordinates should thus ensure they work together as a team while at the same time showing regard to management’s authority.
Moreover, the culture of the Japanese leadership also highly values order and the suppression of conflict. Thus, Beegrip’s leaders always have to ensure that certain decision do not create a shift and, therefore, destabilize the group.
Applying elements of Collectivism and especially the Hierarchical view commonly inherent among Japanese, Beegrip will be able to develop and sustain good relations with the employees and the shareholders.
Awareness and appreciation of these leadership norms will be instrumental be useful when Beegrip seeks to create the much-needed foothold in this market so that the company can institute a set up that will run its operations thus fostering its growth in the area.
7. International Supply Chain Management Issues
When Beegrip chooses to expand its supply chain operations into Japan, the company will have strengths that will help it deal with some of the challenges typical to every international supply chain management process. Japan is also known for its sophisticated transport and other support structures for which the country benefits in aspects of logistics.
The developed transport infrastructure together with technology and location strategy make Thailand a convenient location for conducting supply chain operations in other East Asian markets. But Japan’s regulations are strict and doing business there will pose a challenge due to these stringent conditions having to be met.
Japan’s strict regulatory requirements, which are established to protect their citizens, encompass among other aspects’ quality, environmental impact, and safety. These regulations impose the need in Beegrip of having a dynamic supply chain to enable it provide the necessary legal compliance.
This includes compliance with environmental laws and standards on such issues as disposal of wastes, emission of gases, and use of resources. This means that the supply chain must be flexible enough in order to address the regulatory issues as well as ensure that Beegrip’s products conform to quality and environmental standards that are rigid in the country (Wang & Yang, 2022). For Beegrip this implies that it has ensured quality and sustainability policies and standards across its supply chain management operations.
Besides the regulation, consumers from the Japanese market are conscious of value addition. It is preferred to have increased physical quality where the enhancements and changes in the products can easily be observed.
Hence, Beegrip supply chain stress of keeping on improving and adding the value-added features. This may entail working with suppliers and manufacturers to ascertain the kind of products that the company is coming up with that meets the Japanese consumers’ needs and wants.
One that can be looked at is that cost of carrying out business in Japan is relatively high. As for the costs, labour and resources are significantly more expensive than in most other markets, and this should have implications on the cost of the supply chain.
To be able to minimize these costs, Beegrip has to put in use technology & automation and employ local strategies & partnerships for investment in production in order to eliminate expenses in recurrent production cost.
Therefore, managing an international supply chain in Japan involves flexibility, compliance with regulatory measures, and the concept of value addition. If Beegrip is able to address each of these factors and implement cost efficient solutions then the company can establish a robust supply chain that is capable of underpinning its activities and growth in Japan in the long run.
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References
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