Development of Global Ventures Plc - Case Study Example

?Doing Business in the Philippines Terms of Reference In this day and age, modern globalized economies have seen it fit to perfect capital expenditure strategies and marketing and advertising techniques to a mindless and robotic insistence. That is, as much variants as these coefficients may throw an entrepreneurs way, they seem to be able to field all pitches and bat out an eventual homerun. With the cutthroat environment that the globalized market has seen fit to establish, skill, education and even technical know-how appears to be less and less of an advantage. In this regard, Global Ventures Plc (GVP) cannot be faulted from undertaking the same endeavor as they have considered it as a necessary business objective to not only develop vertically but horizontally, as well. This entails a rabid approach to corporate expansion by seeking ways to concentrate on the establishment of either branches or field offices in other regions or other countries. Global Ventures Plc (GVP), as a technology development and manufacturing firm, will highly benefit from the establishment of business relations in other countries as they will be afforded with a larger client base thereby increasing profit generation and market recognition. In today’s epoch, much of the business enterprises have taken it upon themselves to take up as much space in the international market as they can by establishing corporations in and out of their home offices. This, compounded by the technological development of the 1990s and the market liberalization of the world economies seem to have results in the creation of the trend of companies to transcend borders (Bhagwati, 2005; Sullivan and Sheffrin, 2002). For this reason, it is highly advisable for GVP to undertake such expansion as a necessary course of business and an indispensable measure towards corporate stability. Discussion GVP, as an entity seeking to gain a foothold on the local and international economy and accordingly seize on an adequate market share, has the option to take one of three options to further their development: (1) forge a merger or endeavor to acquire existing local businesses; (2) undertake a sequential market entry; or, (3) enter into joint ventures with local entities (Choucri, 1991). Merger with existing local business entities or the acquisition of the same is heralded as the entry of ‘Foreign Direct Investment’ as it provides the local enterprise with an alternate supply of resources (Choucri, 1991). The sequential entry of foreign investors to the local market may be considered as a “testing the waters” method that allows the concerned entity to gain a working knowledge of the culture and civilization of the target nation before undertaking an all-out venture on the undertaking (Burton, Bloch and Mahomey, 1994). The final alternative, which would entail GVP to enter into joint ventures with local entities, requires that they enter into joint ventures with local businesses. Joint ventures take in the form of business agreements wherein the participating entities called ‘partners,’ consent to pool in a certain amount of their capital or a particular resource for the conduct of a business transaction where the profits and attendant losses shall be divided equitably amongst them on the basis of their participation (Wilburn, 2006). However, this form of entry has often been criticized as being the most inefficient means if gaining access to a local economy since the entry afforded to a foreign entity is summarily limited to the particular dealing contained in the joint venture agreement (Wilburn, 2006). As such, the entrance is relatively restricted to a specific undertaking and the access is only for a fixed period. Be it through mergers or acquisitions, sequential market entry or joint ventures, GVP is likely to gain a right of entry to any local economy as this trend has been the key to the globalization of corporate brands. As such, practices of said nature are likely to persist until the world economy appears to have grown weary of its own evolution. With this in mind and the inherent nature and established corporate mandate of GVP, it has then been deemed as highly advantageous to take advantage of the market in the Southeast Asian Region specifically, the Philippines. This is owing to the fact that the Philippines has been recognized as 14th largest user of mobile phones in the world (2008 CIA World Factbook: Telephones – Mobile Cellular Ranks). Furthermore, reports have indicated that the number of mobile phone subscribers have increased exponentially from 80million in 2000 to 85million in 2010 (Dimacali, 2010). Mobile phone subscription in the Philippines is pegged at 80% that almost four out of five Filipinos owns and uses a mobile phone (Noda, 2009). With over 1.8billion SMS messages sent daily, the Philippines accounts for over 10% of the global SMS activity taking the undisputed top spot in SMS usage and the title of being “The SMS Capital of the World” (Dimacali, 2010). Smartphones or cellular phones providing a host of supplementary functions such as web browsing, document reader, task scheduler and the like, likewise affords the users to gain access to web applications and social media (Calapati, 2010). As such, smartphone manufacturers are seen as likely to gain a huge market in the Philippines and generate significant profit with the relative pervasiveness of the internet-based social networks such as Facebook, Twitter and Friendster (Hamlin, 2011). It was projected that smartphone users in the Philippines will climb to 98% in 2015, the highest projected growth in the world (Hamlin, 2011). Considering the innovation brought in by the chip to be introduced by GVP through features such as the Bluetooth technology, audio conference capability, a sensor that serves as barcode reader, Wi-Fi access, one gigabyte of storage and the advanced language navigation system, cellular phone manufacturers will highly benefit from an all-encompassing technology that will afford them with all the advanced features in one chip. Smartphone manufacturers will benefit from such innovation as this chip developed by GVP serves as a technical portal to advanced mobile applications and relevant functions. A study conducted by TNS, the world’s largest custom research company, called the Digital Life 2011, showed that mobile phone users in the Philippines look for the content and application when purchasing a mobile phone (Reyes, 2011). As such, the power-packed features that will be generated by the chip will serve as a huge advantage to mobile phone and even smartphone manufacturers. Specifically, in the Philippines there are only two local cellular phone manufacturers – My|Phone and Cherry Mobile (Calapati, 2010). My|Phone has been the first Filipino mobile phone brand to have offered the market with dual SIM mobility in cellular phones (myphone.com.ph). This has been the main appeal that afforded My|Phone with a significant market share along with the international brands such as Nokia, Samsung, Apple and the rest. The dual SIM functionality may have been the primal charm that got the attention of the Filipino spending public to try out the relatively unknown local brand (Dimacali, 2010). But the seeming competitiveness of the cellular phones offered by My|Phone and the astounding low prices set against it, the reputation of the company was then established as one of quality and affordability (obilesites.com). My|Phone, as a company, is relatively young with only three years in its belt (Dimacali, 2010). But its visibility in the market and the perception is has gained among the Filipino consumers has made My|Phone into a brand of world-class standards. Cherry Mobile on the other hand, is likewise a young corporation being established only in 2008. Cherry Mobile was the first mobile phone manufacturer in the Philippines to have developed Windows-enabled smartphones (cherrymobile.com.ph). Cherry Mobile also owes its public recognition to the TV-capable feature of its mobile unites allowing users to watch the television in any location utilizing the normal frequency bandwidth (Dimacali, 2010). Cherry Mobile has also launched its Android series with five units allowing functionalities similar to the internationally-renowned Apple and Microsoft mobile systems. In this regard, the viability of the Philippine mobile phone manufacturing industry appears to be very promising as only two entities are struggling to outperform the other. These conglomerates will stand to surpass the achievement of the other in hopes of establishing dominance in the local market. Furthermore, there is a great potential in these companies as both corporations are yet to be exported into the international market. As such, the relative competitiveness and efficiency of the Philippine brand coupled with the advanced technological implement afforded by GVP will invariably result into the creation of a top-notch and unparalleled mobile brand. The economic infrastructure of the Philippines is also likely to benefit GVP as a foreign entity seeking to gain entry in the local market. A study conducted by the Fraser Institute (FI), a Canadian firm, highlighted the fact that the Philippines enjoys free trade with other countries thereby allowing access to foreign investors to enter the country (Reyes, 2011). In 2002, the Philippines was likewise heralded as the 40th most competitive economy in the world by the Swiss Institute for Management and Development (IMD) ahead of South Korea, Singapore, Taiwan, Hong Kong, Malaysia, Japan, Thailand and China (Reyes, 2011). Moreover, the Philippines has been referred to as the most competitive country in the “knowledge jobs” category of the Global New e-Economy Index by the Meta Group, a leading research and consulting firm in the United States (obilesites.com). The distinction deems the Philippines as a viable host to learned and capable professionals in the field of information technology, engineering and business management (obilesites.com). As such, considering the concomitant need of GVP to source out employment following the need to develop the product along with the conduct of its sales and marketing, the company’s requirement of viable employment is accessible in the Philippines (CCI, 2009). The over-all economic condition of the country is also promising. The Philippines has been ranked 77th by the United Nations Development Program (UNDP) in terms of Human Development Index (HDI) (Rufino, 2011). This means the standard of living in the Philippines is relatively high as compared to other countries and that it has even illustrated significant improvement from 0.749 in 2001 to 0.754 in 2002 (Rufino, 2011). The National Economic Development Authority (NEDA) of the Philippines has also reported substantial growth from the three major segments of the economy (Reyes, 2011). These segments are the agriculture, industry and service posting an average growth of 3.4% in 2001 (Reyes, 2011). The fact that the Philippines operates as the most IT-savvy and mobile phone-crazy country in the world, as evidenced by a myriad of reports, prove that engaging the said nation in a business undertaking will only result in profits and market advantage. The fact that GVP is capable of providing the Philippines with needed and wanted technological advancements is a boon to the projected expansion into the Southeast Asian Region. Even the economic policies enacted in the country appears to encourage GVP to head on to the Philippine islands as the nation is highly receptive to foreign investments and the mobile phone manufacturing industry is relatively young and unexploited with My|Phone and Cherry as the only local brands competing in the market along with the highly imported Nokia, Samsung, Sony Ericsson, Apple, Motorola and Blackberry. With these reasons, GVP is deemed to be making a giant leap towards market dominance by entering the Philippine islands. Conclusion The intense atmosphere and palpable aggressiveness of the players in the international market has forced private business entities to seek ways to gain ahead of everybody in the race towards the finish line. Operational tactics and business stratagem have been on the flourish with the concomitant emergence of marketing and promotional techniques and other sales pitching methodologies. The advent of globalization has further led to the entrance of horizontal expansion necessitating the introduction of corporate operational facilities all over the world. This is the measure to be undertaken by Global Ventures Plc. As an entrepreneurial venture that focuses on the development of technologically competitive implements, gaining access to different areas in the world by establishing business agreements and joint ventures with other corporate entities is seen as the manner to gain a significant leverage in the market. Creating business ties with the Philippines has been deemed as a huge advantage in all respects considering the capability of the Filipino in terms of IT, engineering and business development and the reported significant mobile phone usage of the said country. Legislative enactments in the nation are also a positive notion that can only be seen as absolutely beneficial in the said undertaking. The environment posting only two competing corporations is a further indication that entering the Southeast Asian region can only be seen as nothing more than pure development into a place that could only be described as the top. Bibliography Bhagwati, J. 2005. In defense of Globalization. Oxford University Press, New York. Burton, D., Bloch, E. & Mahomey, M. 1994. Multinationals. Challenge. Calapati, J. 2010. Mobile banking takes the lead. [Online] Available at: http://www.malaya.com.ph/10182010/bank1.html CCI, 2009. Electronics Industry in India. Industry Overview. 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