Entry and Co Operative Strategies in Business

Question: Discuss about the Entry and Co Operative Strategies in Business. Answer: Introduction The international business expansion of an organizations operating in any of the industry allows the organization to have a lot of new opportunities for growth and higher sales. The new markets in the corresponding international locations allow the organization to gain new customer base and strengthen the brand image. Along with these new opportunities, the international business expansion of an organization exposes the organization to a number of risks and threats. These risks and opportunities of an international market for a particular organization should be analyzed effectively before expanding the business into the international market. This makes the job of an international operations manager very critical, which is to analyze the opportunities and threats of an international market before advising the higher executives of the organization to expand into the corresponding international market (Killing, 2012). Company background The organization has been operating in the Australian market for quite some time and has been providing various medications to the customers present in the corresponding markets. The organization has acquired a number of small pharmaceutical brands over the years of its operations in the Australian market. The organization has also merged with a number of bigger brands to increase its operations in the Australian markets. The organization is looking to expand its business into the international market in order to increase its profits and expand its customer base (Cavusgil, 2014). South Africa South Africa is one of the developing countries which can be considered as a target international market for the expansion of the organization. This section of the report analyzes the opportunities and risks present in the markets in pharmaceutical industry in South Africa (Hamilton, 2015). Risks There are four major types of risks in any international business expansion operation into a different country. These risks for the markets in South Africa are analyzed below. Cross-cultural risks South Africa has a transactional culture, but the people in the societies across the country have deeply rooted traditions and customs. These traditions shouldnt be offended at any point of time by the organization. There are multiple cultures and languages present across various regions across the country. So the management of the organization has to ensure that the personnel involved in the international business expansion should be well-versed in these languages used in the country. The business environment in the country is also quite informal, which allows the people in South Africa to be direct in their interactions in businesses as well. The international business expansion of the organization should ensure that the decision making processes along with other business processes are carried out by keeping this factor in focus (Tsang, 2016). Country risks The costs of starting a business in South Africa is quite high and the procedure of getting permits for starting a business is tedious through the legal system of the country. The legal system in the country is a bit underdeveloped, which in turn makes the procedure of forcing contracts a difficult task in the country. The government regulations and laws established by the government of the country makes the trades across the borders a cumbersome job through tedious process of getting approvals and permits along with the high costs of trading across the borders of the country (Peng, 2016). Commercial risks The pharmaceutical industry in the country has two tiers, public and private tier. The public tier of the industry is developed on the government of the country. The public sector in the pharmaceutical industry has low funding and provides the products at low price due to the price regulations. The private sector of the industry has the prices similar to that of the developed countries, but the low prices in the public sector of the industry can become a significant risk for the international business expansion of the organization. The national health plans from the government of the country also allows the demand for the low-cost drugs to be very high (Hill, 2013). Currency (Financial) risks The revenue growth of the pharmaceutical industry in the country has been restricted by a number of factors in the country. Some of these factors are price regulations implemented by the government, slowing growth of the economy of the entire country and the low purchase power of the population of the country. The trend of the slowing economy of the country is expected to continue till the year of 2018. Opportunities The pharmaceutical industry in South Africa also provides a number of opportunities for the international business operations of the organization. Some of these opportunities of the corresponding industry are mentioned below. The country possesses the most developed manufacturing base in the continent, which allows the organization to have effective options for the manufacturing of the products sold by the organization. There are a number of renowned life sciences and biotechnology companies present in the country and some of them are also headquartered in the country. This provides the organization with the opportunities of mergers for the international business expansion (Casson, 2013). The scientific base of the country is well developed and includes skilled human capital and effective infrastructures. This allows the organization to have the resources for the business expansion at fairly low costs. The regulated medical environment in the country allows the pharmaceutical industry to have good business ethics in place. This in turn allows the organization to have an ethical industry for the international business expansion (Aronczyk, 2013). The products sold in the private and public sector of the pharmaceutical industry are not of very high quality. So the organization has a good opportunity to introduce its products in the pharmaceutical industry of the country. Even if the economy of the country is expected to be in a slowing trend till the year of 2018, it expected to grow by an average of six percent a year. This in turn allows the organization to have a stable economy for its international business operations. China Some of the risks and opportunities present in the pharmaceutical industry of China are mentioned in this section of the report. The four major categories of the risks in the pharmaceutical industry for the international business expansion of the organization are mentioned below. Cross-cultural risks The country is home to a large number of individuals from different cultures, backgrounds and buying power. This vastness of the market along with its heterogeneity is one of the biggest risks for the international business operations of the organization. The pharmaceutical industry in China has developed a gray market in which the drugs are imported from the neighboring countries at lower costs by getting purchased with prescriptions. This in turn is a risk to the international business expansion of the organization as the ethics implemented in the corresponding industry isnt very effective (Dobbs, 2013). Country risks The pharmaceutical industry in China provides preference to the domestic players in the corresponding markets. There are a number of restrictive compliance guidelines imposed on the foreign firms operating in the Chinese pharmaceutical industry, which arent imposed on the domestic companies operating in the same industry. A number of bribery allegations in the recent past has caused the Chinese government to be very cautious of the operations of the foreign organizations in the pharmaceutical industry. This in turn has resulted in a very high level of scrutiny of the business operations in the Chinese pharmaceutical industry. Commercial risks The pharmaceutical industry in China has a number of domestic organizations operating in it. These domestic organizations are supported by the government and the majority of the population are inclined towards buying the Chinese traditional medicines manufactured by these organizations. This in turn creates a risk for the international business operations of the organization. The market intermediaries present in the Chinese markets are not effective in working with foreign organizations. So the international business operations of the organization face a risk in putting an efficient supply chain in the corresponding markets (Puffer, 2013). Currency (Financial) risks The economy of China is at a phase of slow growth, which is a risk for the international business operations of the organization. The slow growth of the Chinese economy doesn't allow the organization to have a lot of growth opportunities in the corresponding market. The compliance guidelines implemented in China doesn't allow the foreign direct investments to happen smoothly or quickly. The process of taking money out of China is also a slow process, which takes a long time to get approvals and permits. This is a significant risk for the international business operations of the organisation as the monetary transactions of the organization are directly affected by these compliance guidelines and inefficient processes (Kumar, 2012). Opportunities Some of the opportunities provided by the Chinese pharmaceutical industry are mentioned in this section. The healthcare reform plan proposed for the changes in the pharmaceutical industry till the year 2020, includes a number of changes in the healthcare policies. These changes allow the organisation to have less restrictive operations in the corresponding markets (Forsgren, 2014). The Chinese pharmaceutical industry is expected to grow in the recent future in terms of the revenue. This in turn allows the organization to have a lot of opportunities to generate revenues from the pharmaceutical industry. The elderly population of the societies in China is the largest in the world. The high count of elderly individuals increases the demand for the healthcare services and medications in the corresponding markets. This allows the organization to have good demand for the products sold to the consumers. The healthcare expenditures in the Chinese market are expected to grow steadily in the next five years. This allows the organization to have a lot of demand of the products sold in the Chinese market (Whitelock, 2013). Recommendation The analysis of the opportunities and threats in the pharmaceutical industry in China revealed a lot of information essential for the international business expansion of the organization. The analysis revealed that the pharmaceutical industry in South Africa is the better option for the business expansion of the organization than China. As mentioned earlier, the opportunities for the organization in the Chinese pharmaceutical industry are limited as compared to the threats present in the corresponding markets. But in case of the pharmaceutical industry in South Africa, the opportunities for the organization can weigh out the threats present in the corresponding industry. Entry mode The entry strategy of the organization for the pharmaceutical industry in South Africa should focus on the different macro and micro environmental factors. The entry strategy of the organization should ensure that the international business operations yield the maximum value from the opportunities provided by the corresponding industry in South Africa. The organization should ensure the utilization of the highly developed manufacturing sites in the country through effective deals and contracts (Taylor, 2013). The organization should take advantage of the capabilities of the big life sciences and biotechnology companies already operating in the corresponding markets through merger. The organization can merge with any of these bigger organizations to introduce its business operations into the corresponding market. The organization should promote the high quality of its products in the South American markets to gain a competitive advantage over the existing low quality products available in the private and public sector of the corresponding industry (Dunning, 2012). The slow moving economy of South Africa is expected to grow steadily after the year of 2018. The organization should plan and implement effective operational strategies to cover the entire timeline till the year of 2018. Along with the opportunities, the organization should also consider the threats present in the South African pharmaceutical industry before expanding its business operations into the corresponding markets. The entry strategy of the organization should consider the presence of multiple cultures in the country and should employ local individuals in the initial phase to support the business operations in the corresponding markets and the individuals transferred from Australia. The organization should define and implement an effective recruitment and selection strategy to ensure the recruitment of the skilled employees from the markets in South Africa. These recruitment strategies should also focus on the familiarity of the individuals with the local traditions, customs and languages (Suzuki, 2015). The analysis of the government guidelines and regulations are very essential for the expansion of the organization into the South African pharmaceutical industry. The organization should ensure that the contracts are drafted much earlier to ensure the timely approval from the corresponding government. The organization should consider partnering with service providers and regulatory bodies operating in South Africa to ensure faster approvals from the government departments (Beamish, 2013). The pricing strategy of the organization should consider the price of the products sold by the private and public sector of the corresponding industry in South Africa. The organization should introduce the professional with affordable price range to allow the individuals in the corresponding markets to prefer the products of the organization over the low cost products sold by the private and public organizations in the corresponding country (Ferraro, 2015). The organization should implement effective marketing and promotion strategies to attract more number of customers in the South African markets. The promotional and marketing strategies of the organization should focus on spreading the high quality of the products of the organization at affordable price range. The marketing strategy of the organization should ensure that the individuals in the corresponding markets are convinced of the products sold by the organization to be better than that of the competitors in the corresponding markets (Piekkari, 2014). References Aronczyk, M., 2013. Branding the nation: The global business of national identity. Oxford University Press. Beamish, P., 2013. 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