International Management Market Entry free essay sample

Introduction If an industry has decided to conquer the international market, there are many choices that will be opened. These options may include the cost, risk and the degree of control that the company will encounter ( 2001). In entering an international business, it is important that the management of the company should be able to choose a marketing entry strategy so as to make the company be more competitive ( 1986). Primarily, the purpose of this paper is to provide an analysis of the marketing entry mode that British Petroleum may use to enter the Hong Kong Special Administrative Region (SAR) market. In this manner, the discussion of the current situation of Hong Kong will be analyse as well as the international management approach that can be used by the company to sustain competitiveness within the international market. Overview of the Company British Petroleum known today as BP Amoco is a petroleum industry based in London. We will write a custom essay sample on International Management: Market Entry or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page It is recognized as one of the top four oil and petroleum companies throughout the world. The company started in 1901when William Knox D’Arcy was given the permission by the Shah of Persia to explore the land for oil and founded one in May 1908. Because of this discovery, the Anglo-Persian Oil Company was established so as to expose these findings. The company has grown gradually because of this as World War I is happening; the British Government shows intense interest to the company which became the source of fuel oil of Royal Navy during WWI. In 1917, the war gives permission to the British Government to have full control of the company and named it British Petroleum ( 2006). The company has continued to become one of the largest oil companies in Europe and because the company wanted to expand its market, BP merged wit the American Oil Company (AMOCO). The strategies used by the management have been the major factors for the company’s success. In addition, the ability to include international marketing has made the company become one of the most successful oil companies all over the world. Today, the company operated in more than 100 states in 6 continents. The main goal of this company is to drill and find oil. The major activities of BP Amoco is exploration and production of natural gas and crude oil; refining or decontamination, marketing, supply and transportation and production and marketing or petrochemicals. In addition, the company also engaged itself in solar power. The strategic use technology and strategic management can be considered as a factor for this achievement. The company also acquires (Arco) and has been able to launch a combined global branding. The company offers products and services which are divided into three categories; on the roads which include fuels and stations, fuel cards, Liquified Petroleum Gas (LPG), lubricants, roadside assistance and route planners, for the home which consists of products like LPG, online store and solar and renewable; and for business which include air BP, Bitumen, BP Marine, BP open books, BP shipping, petrochemicals, power, natural gas, lubricants Liquified natural gas (LNG) and LPG, fuels, fuel cards and solar and renewable. In order to easily reach their customers, BP also uses the internet through its website ( 2006). Analysis of the Choice of Foreign Market In the business arena, it is important that an entrepreneur must be knowledgeable about the different marketing strategies that must be utilised in order to make the business prolong its competitiveness and stay in the marketing world, locally and internationally. The management of an enterprise that are considering entry into a foreign market must be able to make decisions focusing on uncertain and changeable circumstances that might be faced ( 1997). To successfully enter international market scene, it is important that the management should determine which country to choose ( 1997, 1992). It is a very crucial factor because the economic status of such country will be one of the major factors that can help boost the competitive advantage of a Firm BP Amoco chooses Hong Kong even though there are lots of competitors to outgrow, because of the economic status of the country. Since the country has a positive vision regarding oil and natural gas products and other chemicals, BP can use this as an instrument to expose its products in the population of China ( 1997) and show the quality of products and services they offer. Various Environments When a firm decides to expand its venture to international market, t faces different challenges that need to be given emphasis (, 1999). One of the most important considerations that should be given enough attention by the management of any industry like oil industries is the different environmental factors that affect the firm as a whole (1980). BP operates in a complex and more competitive environment. This is because only few countr ies can able to produce oils and natural gases. In this manner, the competition to produce and provide products and services for different consumers is demanded not only in the domestic arena but most especially to the international market ( 1995). The environment in which oil industries belong is a kind that must be given enough consideration in order for the company to be recognised in the whole world. Factors, such as consumer segments, political, economic and technological factors ( 2000) are few of environmental aspects, needed to be determined by BP as it enters an international market. In Hong Kong, it can be said that the country has a strong political system. This means, the British Petroleum should be able to adhere to the political status of Hong Kong in terms of business operations. Moreover, the economic status of the country is also considered as strong since it allows foreign investments to enter the PRC market. And since the needs of oil and other oil products is in demand with, it can be said that the market will be able to consider BP as an important industry that will provide quality oil products and services. In this regard, BP entry to Hong Kong is plausible and that with strategic marketing entry the company may ensure growth in this nation. In terms of technological aspects, the country has been able to adapt modern technologies to ensure growth and development within its territorial boundaries. This means that, Hong Kong is a potential international market for British Petroleum. Competitive Strategies As one of the worlds biggest oil and petrochemical companies, British Petroleum (BP) has international operations in over 70 countries with 233 billion revenues, and 103700 employees. It focuses on oil and gas exploration and production, the supplying of petroleum products, and the manufacturing and marketing of chemicals. Currently BP owns five recognized brands worldwide which include BP, am/pm, ARCO, Aral and Castrol. ( 2005) With the rapid change of the external environment, BP has regarded itself as a modern, global, decentralized and learning corporation that must learn to be adapted and responsive accordingly ( 1997. ) The leaders of BP knew that to maintain BPs competitive advantages and its leader position, it is no more relies on their experiences but the technical skills, political and operational knowledge because oil may be found in more challenging environment and even will be replaced by alternatives, such as hydrogen and solar, in the future. , BPs CEO, has claimed that learning is the foundation stone of BP to adapt to change. To identify the opportunities that their competitors may not see, BP has to create and distribute knowledge throughout the organization, thus learn faster and exploit faster than their competitors. ( 1997; 2000) Similarly, Mr , head of BPs information technology architecture and strategy, claimed BP needs to know what it knows, learn what it needs to learn and apply that knowledge as quickly as possible for sustainable competitive advantage, ( 1998) Thus, the vision of BP is to be an integrated world-class, agile learning organization ( 1998). Party of the business strategy of BP is its effective entry to international market which makes the company become more recognized in the business arena. In addition, the company is able to seek improvement in its business operation and tries to provide innovative products for the target market ( 1996). As mentioned, the company divided its market into three categories which helps them in knowing what the needs of their customers in specific categories are. Motivations for Market Entry Entering a new market is a complex decision which must be given focus and attention. With the goal of establishing a business that would be recognized and patronized by consumers, more and more entrepreneurs are trying to enter the market swiftly. There are different motivations for market entry (, 1990). One of the motivational factors to enter an international market is the chance given by this investment to make the company become more competitive among its rivals. It can be said that one’s an industry becomes a multinational company, there is an implication that such company has been able to establish a competitive position in the marketplace not only in the local but most especially to the global arena. Marketing entry is also capable in making a certain business enhance and expand its business portfolio. In line with BP, the company enters an international market (Hong Kong) in order to establish a company that would be powerful not only in Europe but in different continents as well. Modes of market entry In the market arena, it is important that a business firm or company should be able to include global competitiveness in their marketing strategy. The paradox of globalisation has always been one of the great influences for a company to lasts. In order to compete globally or internationally, the management of a firm should be able to choose a mode of market entry that will help them to achieve their goal. All of these modes involve resource commitments (albeit at varying levels); firms initial choices of a particular mode are difficult to change without considerable loss of time and money ( 1987). Entry mode selection is therefore, a very important, if not a critical, strategic decision. The four most common modes of foreign market entry are exporting, licensing, and joint venture and solve venture. Collaborative venture is the term used when a business company merged to other company for the purpose of entering the international market. This is an alternative mode of exploiting a particular asset such as retail and potential branch network to form an arrangement with an established supplier of the product. Collaborative ventures both jointly owned and affiliate company arrangements are known to be an obvious ways of spreading risks and acquiring access to expertise ( 1994). Here, the collaborative arrangements with an existing market participants also means that the entrant can transfer resources into the industry without necessary disturbing that industry’s current competitive structure too much ( 1993). It is a mutual understanding between the entrant and the existing firm to collaboratively work with each other for the expansion of the business portfolio of each company (1987; 1987). BP mode of market entry to Hong Kong is through a joint venture to either CNPC or Sinopec or Asiatic Petroleum Company. The joint venture mode is preferred by larger and more multinational firms. By having a venture with other bigger and competitive oil companies which are currently operating in Hong Kong or in China, British Petroleum products may be known in the HK market. An international joint venture is a distinct enterprise or multi-organizational agreement, created as an alliance between two or more parents organizations working across country borders in designing and managing the venture ( 1996). In order to do so, the company must ensure that the company is willing to have a joint venture with BP. n addition, BP may also use a third party stakeholder to help them in designing and implementing joint venture with an existing petroleum and oil industry in Hong Kong. For instance, banks, government agencies, union officials, suppliers, distributors and legal officials often make critical contributions in designing-implementing parts of an international joint venture. Enterprises with little prior experience in setting-up joint venture almost always underestimate the impact of third party involvement ( 1989). Conclusion International marketing is a complex process. In order to successfully enter the foreign market the company must see to it that all their resources are ready to face the risks of such investment. In addition, the company must be able to identify different factors that may affect the entry of the company to the marketplace. Analysis shows that BP must be able to utilize a strategy which enables the company to gain competitive advantage both in local and foreign market. Since, Hong Kong accepts foreign investment; BP must be able to provide appropriate agreements to adhere to the current situation of Hong Kong market. Analysis also shows that the economic status of HK is an indication that BP may be able to easily provide its products and services to different segments of the market. The entry of BP to Hong Kong can also be considered as beneficial for both the company and the country. In terms of strategic approach for international market entry, BP had used standardization to streamline its business portfolios in China. The company had emphasised the strategic use of technology, strategic management system and a strong and competitive organisational structure as the main reason why it has become successful in its venture of providing its products and services to China. In the analysis, the only recommendation is, BP must continue to strategically and effectively decide on different investments that would enhance its business performance both in the local and international market. Herein, the merging and acquisitions of different companies must be continued to provide innovative products and services in terms of oils, gases, and petrochemicals in the future. In addition, the company must continuously integrate its business strategy and information technology. It can be concluded that the right choice of market entry mode along with the concept of strategic management and other efficient marketing approach, can make a company succeed in achieving its goal of providing quality products with their target market. However, decisions should be made strategic also. This means, that the company should have the ability to decide which among the market entry mode can be helpful to the company itself and suitable for the international market that the company will consider.