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市场营销专业作业:A repot on PK Electrics entering international mark

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A repot on PK Electrics entering international markets

Content
Introduction…………………………………….3

Recommendations……………………………3

 The reasons why it is considering entering international markets…...3

 Two sources of information that PK Electrics should access before deciding which international markets to enter…………………………...4

 Key opportunities and threats associated with entry international markets. ………………………………………………………………………...5

 Process PK Electrics would use to select………………………………...6

 Modes of market entry available to PK Electrics………………………...6

 The most appropriate method of market entry for PK Electrics………7

Conclusion…………………………………....7

Reference……………………………………...8

Report on the PK electrics

Introduction

Since 1990s, trend of the world economy are obviously becoming globalization, integration and internationalization and international economic trade competition becomes increasingly intense. International economic trade environment changes, the China economic strength to enhance and further opening-up, especially after China's entry into the World Trade Organization, Chinese enterprises must objectively are required with new idea, the new research methods and means, to make a new strategy and tactics to meet new challenges. According to the case study, PK Electrics, as a domestic business, it has grown from a local supplier producing supplies and currently operating three factories. The past few years seen continual growth, but over the last two years the rate of growth has begun to decline with sales rising 5% and profits by 2% last year. As a result, the management team is aware of big changes in international trading. They are now looking outside China for new markets to enhance their growth and business performance.

This report has been written to explain why the PK Electrics wants to enter the International markets. The author also analyses systematically what information they need to investigate before entering and what factors they will meet when entering international markets. What’s more, the process of selecting the suitable market and the modes of new markets entry outside China available to PK Electrics, which could direct them to enter the international markets have been introduced in the report. At last, the report is also written to demonstrate a best method of entering international markets for PK Electrics.

Recommendations

Q1.The reasons why it is considering entering international markets

When it comes to entering the international markets, companies usually have various reasons. In this case study, the PK Electrics management team also has their motivation to enter.

First of all, the reason could be the saturation of domestic market. Because of traditional exports are limited by importing countries and international market.  Although, the organization of PK Electrics has developed a good reputation for quality and customer service, they become more and more difficult to cater to people's standard of living. Some people even think that imports are much better than “made in china” in quality, brand .Then it leads to slowing growth and profits in the home market, and also the domestic market share is increasing difficulty in increasing market share .

And because of the impact of competition at home reducing growth and profits, the international market development space is getting smaller than before. But if they entered international markets, lower costs allowing competitive pricing in international markets, they could sale some goods that early obsolete goods to other developing countries or underdevelopment countries. Like Hisense, through the market research, they found that for most consumer groups, inexpensive high-quality 18 inches are more accord with their purchasing power. And this immediately became the selling point of chain store and gains the reputation from South Africa customers.  

On the other hand, with the Chinese economy becoming more market-based and the more recent impact of China joining the WTO. Multinational companies continually enter the Chinese market; its culture and image also are brought into China. They are increasingly tending to think that only at my doorstep success has been insufficiently explain the competence of the enterprise. Go abroad, become the transnational enterprises, can win in the international competition, true competitive enterprises. This is also the Chinese enterprise adapt to the WTO, facing the challenge of new pattern of multinational companies, and seek for survival and development trend.

Q2.Two sources of information that PK Electrics should access before deciding which international markets to enter

Before PK Electrics deciding to enter the international markets. When considering entering new international markets, the effectiveness of the strategy will depend on the quantity, quality, and relevance of the information on potential markets and how well the company interprets and acts upon it. Manager also decide what needs to be done, who is doing it, and evaluate the success with it was done.

There are two key sources of information, one is primary, and this is that organization collect information first hand for a specific purpose. Primary sources should gathered by representatives o the organization in person, and commissioning research to be undertaken on behalf of the organization. Furthermore, they all must be valid, comparable and reliable.
 
Secondary can be the diagram above. What’s more, a good starting point is the department that deals with industry like Ministry of Commerce. And other organization for economic co-operation and development reports. Foreign embassy websites likewww.wto.org, www.fco.gov.uk and www. Worldchambers.com is also important..

Q3.Key opportunities and threats associated with entry international markets.

PK Electrics will meet opportunities and threats when it enters the international markets. A good starting point for any research into potential new market is the use of external environmental factors in the form of STEPLED. It is stands for social, technological, economic, political, legal, environmental and demographic. And as a Chinese business, the cheap labor is its competitive advantage.

Considering the social factors, can be a challenging threat that PK Electrics must face the developing international brand and strong, global brand, strength, and already occupies a very solid position, well-known multinational companies such as Siemens, Philips, SONY. Secondly, consumer demand and consumption mind are more mature most of them have preference brand, and demand also obtain the better satisfied. In addition, the higher cost of employee also might be the other threat.

Moreover, the technological might be one factor that the company is unavoidable. The foreign markets, especially the developed countries markets, they have high-technology themselves, but PK Electrics must depend on others. They do not have much independent research and development of technology. It could lead to the influence the work efficiency.

According to China's open economic policy, especially entering the WTO; Chinese business has received the support from government. It helps Chinese entrepreneurs have freedom to make win-win strategies, not only increase the sales and profits, but also acquire reputation in the international markets, improve the international status, publicity the Chinese culture.

However, environmental is a also important factor. The management of PK Electrics is now in the hands of a young dynamic team of managers. As younger, they are ideal, ambitious, and enthusiastic. They will not make the company out of date, but update and upgrade constantly. 

Q4.Process PK Electrics would use to select

After accessing the information to decide which international markets to enter, PK Electrics should select the most suitable market seriously. The process is not complicated, but must be careful.
Stage1.
It includes primary research and secondary research, which used to collect information from a variety of reliable sources. The use of external environmental factors like PEST, SLEPT, STEPLED analysis to evaluate and access the international markets.
Stage2.
Screen the collected information by using set criteria such as BERI Index-Business Environmental Risk intelligence.
Stage3.
Select high ranking countries. Focus on the top-scoring countries.
Stage4.
Apply secondary screening criteria using data from markets and the business, e.g. Market attractiveness, competitive advantage
Stage5.
Select best country to enter. Often the hardest decision is the most crucial. So, pay more attention to it.
Stage6.
Prepare an international marketing plan.

Q5.Modes of market entry available to PK Electrics

As PK Electrics decide the choice of international market entry mode, it needs to consider carefully each mode in terms of cost, commitment, control, speed and risks.

Exporting is perhaps the most commonly used entry mode and initial stage for a majority of companies. Methods of direct and indirect exporting e.g. use of agents, distributors, trade missions, piggybacking and overseas sales offices. Export is an inevitable trend. The raw material of China even Asia, the developing and underdevelopment countries are rich but low price. Therefore, low cost is the best benefit of PK Electrics’ exports.

The methods of overseas production are divided into franchising, licensing and joint venture. Franchising is a form of market approach in which a company, the franchisor, grants another independent organization the right to do business in a particular way. Licensing is that company (licensor) owning intangible property (know-how) grants another firm (licensee) the right to use it for a specified time. Joint venture is that separate company created and jointly owned by two or more independent entities to achieve a common business objective. Although there are other methods such as strategic alliances, contract manufacturer and overseas production facilities.

Q6.The most appropriate method of market entry for PK Electrics.

It is vital to choose an appropriate method to entry the international market for PK Electrics. As over the years PK Electrics has grown from a local supplier producing a limited range of electrical cabling and switches and light fittings. As this is a first venture the best method would be the use of an agent or distributor e.g. a large retailer or wholesaler in the host country.

On one hand, the advantages are:in the case of cost, this type of company needs a majority labor and raw material which involves low cost. It is quick to entry because of a good reputation for quality, customer service and competitive price; it is predominant in this area. As the risk, the company is low risk especially if they use distributors as they pay for the goods they purchase from them. And it is limited the risk in a first venture. It also reduces the level of involvement.

On the other hand, this methods have disadvantages that distributor will pull out the benefit. It does not belong itself. The financial investment required is limited. And the limited infrastructure required will negatively affect the speed of entry. The main disadvantage of this method is a lack of control — the reliance on others to find markets and sell your products.

However, the advantages and disadvantages depend on how the managers control the company, understand how to seize the opportunity and deepen reform to scale new heights in the implementation of the open policy. As this is a first venture the best method would be the use of an agent or distributor e.g. a large retailer or wholesaler in the host country.

Conclusion

As we all know, it is hardly and challenging to open a new business area, especially enter international markets. People should pay attention to all the procedures. According the reasons to consider entering international markets. First of all, assess the sources of information. Then identify the opportunities and threats that might meet in the future. Furthermore, ensure the process involves six stages before deciding which markets should enter. Last but not the least; decide the most appropriate method or mode of market entry.

To conclude, the way to enter the international market is both challenging and full with opportunities.

Reference

1.Scottish Qualifications Authority, International Marketing: An Introduction,
 
2.China: China Modern Economic Publishing House, 2008

3.Web of WTO:www.wto.org

4.Web of FIAS:www.fias.net

5.Mulbacher et al, International Marketing, London: International Thomson Business Press, 1999.

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