Management Team at Itree - Research Paper Example

RESEARCH REPORT FOR ITREE PREFATORY PART Acknowledgment It is impossible to mention all the people who played a role in this research. However, it is worth mentioning that the management team at Itree was instrumental in helping me to access all the information about the company that I needed for this research. My tutors at Wollongong were also very supportive to me throughout the time that I spent conducting this study. I also would like to thank my friends who helped to me carry out this research. Lastly, I thank my family for the support that they offered me throughout the time that I spent carrying out this research. Table of Contents PREFATORY PART 2 Acknowledgment 2 It is impossible to mention all the people who played a role in this research. However, it is worth mentioning that the management team at Itree was instrumental in helping me to access all the information about the company that I needed for this research. My tutors at Wollongong were also very supportive to me throughout the time that I spent conducting this study. I also would like to thank my friends who helped to me carry out this research. Lastly, I thank my family for the support that they offered me throughout the time that I spent carrying out this research. 2 Executive Summary 13 This research report analyses how Itree can expand to the international market for hi-tech software development products and services. In general, this is done by matching the capabilities, resources and strengths of the organisation with the opportunities and threats that exist in the high-tech software development products and services at the international level. 13 The main question that is addressed in the research is how Itree can expand to the Chinese transport markets. The focus is on the field of advanced high-tech solutions in regard to compliance, regulation and enforcement. To address this issue, a qualitative research was conducted in which qualitative primary and secondary data related to the subject of the research was collected and analysed. 13 The results of the research show that in relation to organisational readiness, Itree is well prepared to expand into the Chinese transport market. The company has a wide range of resources and capabilities which it can use to successfully enter the Chinese market. Further, the growth prospects of the Chinese software market in general and the fact that the company has been in the business of providing a wide range of software solutions to government agencies means that the products of Itree are suitable to the needs of the Chinese market. It is however, observed that the company is likely to face a number of risks arising from the competitive nature of the market on one hand and possible changes in the factors of the macro environment on the other. Finally, it is recommended that as much as the company is expanding to the market, it has to put in place measures that will help it to address the risks that are inherent in the market. 13 CHAPTER I: INTRODUCTION 14 Itree is a software development company which is currently based in Australia and New Zeeland. The company provides a wide range of software solutions and products to different types of clients, mainly large corporations and governments. Over the years, the company has developed its systems and processes to emerge as a specialist in the development of advanced high-tech software products and services which are used in regulation, compliance and enforcement activities of governments. Additionally, the products and services of the company are extensively used in the following industries: maritime, fisheries, rail transport, road transport and transport security. 14 Over the years, Itree has been experiencing organic growth in terms of demand for its products and services (Itree 2016). This growth has been underscored by several factors, some of which are outlined as follows. First, the company has prioritised the need to meet the specific objectives of its customers. Using this approach has enabled the company to develop a reputation for developing highly effective software solutions that meet the expectations of its customers. The second factor that has enabled the company to experience rapid growth in the recent past is related to the manner in which the company has focused on producing high quality products and services. Third, the growth of the company has been enabled by a highly innovative approach to business that the company has taken. This has made it possible for the company to develop new products and services that address the changing needs of clients in the market. 14 It is against this backdrop that the company has to make decisions about how to expand to international markets, particularly those markets that are related to the use of high-tech software solutions by government agencies for enforcement, regulation and compliance. Addressing this issue is the essence of this research. 15 CHAPTER II: LITERATURE REVIEW 16 Literature Review 16 The issue of how Itree should expand to international markets can be seen within the context of internationalisation of business organisations. In theory, internationalisation is the process by which business organisations expand their operations and market their goods and services in markets that are located in different countries (Durmaz & Tasdemir 2014, p. 147). This means that as companies internationalise, the make decisions and take specific steps that help them to expand their operations to areas that are located outside their domestic areas. 16 It has been argued that there are different factors that can motivate companies to expand their operations outside their domestic areas (Heino 2008, p. 7). According to Delios (2012, n.pag), companies are motivated to expand into international markets because they spot the unique opportunities that may arise in the international markets. Thus, as a result of the imperfections that exist in markets, opportunities may arise in different markets in the world and to take advantage of such opportunities, companies are required to internationalise their operations. The imperfect conditions that may exist in the market at different times and which may motivate companies to internationalise occur in different forms. For example, Kazmi (2008, p. 173) notes that issues such as lower tariff barriers, lower costs of manufacturing and the emergence of new demand for products and services in specific regions of the world are some of the issues that may encourage companies to internationalise and reap the economic benefits that are associated with the process. 16 The manner in which companies can internationalise and the issues that they need to take into account when internationalising has also received academic attention. For example, it has been noted that companies are required to take into consideration their research and development capacity when making the decision and steps necessary to access different markets (Dachs, Stehrer & Zahradnik 2014, p. 10). The essence of this is that innovation is one of the main tenets that drive the success of business organisations (Dachs, Stehrer & Zahradnik 2014, p. 10). As such, companies that have very strong research and development activities tend to be highly innovative. This helps them to successfully develop products and services that address specific market needs at the international level. 17 On a different note, Piscitello and Rabbiosi (2006, p. 2) tie the internationalisation of business organisations to the benefits that companies get from knowledge transfer. They argue that as a result of internationalisation, tacit and explicit knowledge is transferred between the subsidiaries and the headquarters of multinational corporations (MNCs) and this improves the overall performance of the companies over the course of time (Piscitello & Rabbiosi 2006, p. 2). Thus, it can be seen that companies internationalise as a way of taking advantage of market opportunities to reap economic benefits. 17 Therefore, companies internationalise in response to different factors and in doing so, they need to have specific capabilities that will help them to benefit from the process. 17 Theoretical Framework 18 The theoretical framework of this research is based on the interaction between the dependent and independent variables. The dependent variable in this research is the decision of the company to expand its operations into international markets. This decision is affected by several factors, which form the independent variables. The independent variables can be summarised as the strengths and weaknesses of the company in relation to the need to internationalise and the threats and weaknesses that exist in the international market into which the company seeks to expand. 18 It is important to note that these variables arise from the four key theories used in the research. The four theories used in the research are as follows: the theory of internationalisation, Porter’s Five Competitive Forces model, and the PESTLE and SWOT models. In the first place, the decision on how Itree should expand to international markets is based on the issue of what opportunities exist in the market and whether the company has all the resources that it needs to expand to those markets. According to Jung (2007, p. 10), companies require varying amounts of capital, among many other resources, when they go through the process of internationalisation. The variation is said to be based on whether companies are product or service-based (Jung 2007, p. 10). 18 The nature of the international markets is analysed using the PESTLE and SWOT models. By analysing the effects of “political, economic, social, technological, legal and environmental” factors of the external environment, the trends, threats and opportunities that exist in the international markets to which the company plans to expand are explained. Similarly, Porter’s Five Competitive Forces model is used to analyse the nature of the industry and how this is likely to affect the decisions of the company in relation to the internationalisation process. 18 The following is a depiction of how the dependent and independent variables of the research interact with each other. 19 CHAPTER III: RESEARCH METHODOLOGY 20 Statement of the Problem 20 The proposed research will be carried out to address the problem of how Itree can expand to the Chinese transport markets in the field of advanced high-technology solutions in regulation, compliance and enforcement. To address this main problem, the issues of the extent to which the company is ready to expand to the international market will be addressed in this research. The first one is the extent to which Itree has the capacity to expand to the international market. Burgel (2012, p. 53) notes that companies need a unique set of resources in order to successfully expand their operations at the international level. Similarly, Mattes (2010, p. 271) notes that companies that internationalise need to have a level of innovativeness as well as organisational systems which can be used to take advantage of opportunities as well as address the risks that exist in international markets. 20 Objectives 20 The research is based on four specific objectives. These are outlined as follows. First, the research seeks to determine the extent to which Itree shows a level of organisational readiness that is suitable to help it to enter the international (specifically, Chinese) market. The second objective of the research is to determine the extent to which the products and services that are offered by the company are suitable to the needs of the market and the regulatory environment that is prevailing in international markets. Third, the research is based on the need to determine the current size of the Chinese transport market and its potential growth prospects. Fourth, the research seeks to determine the nature of the competitive environment in the Chinese transport markets. The fifth and last objective of the research is to determine the types and nature of potential risks that Itree will meet when expanding to the Chinese transport markets. 20 Methodology 21 From the problem definition of this research, it can be seen that in general, the research seeks to determine the extent to which Itree is ready to enter to the international market for its products and services. Hence, the research seeks to match the internal resources and capabilities of the company with the opportunities and threats that exist in the international market into which the company intends to expand. By doing so, the research seeks to identity the relationship between the strengths and weaknesses of the company and the opportunities and threats that exist in the international market and how this will affect the decisions and steps that the company has to make as part of its internationalisation process. 21 Limitations 21 In theory, qualitative research is associated with limitations such as overreliance on secondary data and the risk of misinterpreting the documents used (Merriam & Tisdell 2015, p. 180). This research is entirely based on qualitative data. Hence, the rigour that is associated with the analysis of primary quantitative data is not captured in this research. As well, by its nature, the research largely relies on secondary data in the form of information published in different forms. Thirdly, the research is conducted to be conducted within a time frame of 35 weeks. This time frame does not take into account the possibility of delays that may be caused by unforeseen circumstances. 21 CHAPTER IV: ANALYSIS AND INTERPRETATION 22 The level of organisational readiness 22 This research sought to determine the extent to which Itree, as an organisation, is ready to internationalise and enter into the Chinese transport market. From the results of the observations carried out on the organisation, the detailed interview with a senior management executive of the organisation and a detailed review of secondary data that is related to the operations of the company, the following is a summary of the extent to which the company is ready to internationalise. First, the company has a considerable level of experience, having operated in the software development industry since its inception back in 1996 (Itree 2016). During the long period of time that the company has been in operation, the company has managed to gain a lot of experience and develop important partnerships. 22 The second factor that determines the readiness of the organisation to internationalise is in the form of the core strengths of the company in regard to its capabilities and resources. The interview with the executive indicated that Itree values its knowledge and expertise in the industry and considers it as one of its key capabilities. Additionally, the company takes pride in its ability to handle big projects and that is why it is motivated to pursue projects whose budgets exceed US$ 1 million. 22 What should be noted is that the capabilities and resources of the company correspond to what researchers describe as the most important criteria that can be used to judge the extent to which an organisation can successfully expand its operations to international markets. For example, David and Cariou (2014, p. 7) note that things such as the level of competence of the management team of an organisation, the value of its relationships and the extent to which the organisation has the financial and technical means to expand are important considerations. Similarly, Hamidizadeh and Zargaranyazd (2014, p. 45) note that the international readiness of a company can be measured in terms of the extent to which the company has put in place marketing, functional and managerial processes that can be relied upon during the internationalisation process. All these aspects, which are related to the specific attributes of a company and how the attributes can help a company successfully internationalise, arise from concepts of the theory of internationalisation (Kadric & Rangelova 2013, p. 28). Therefore, based on the data collected, Itree can be said to have met nearly all the important criteria for internationalisation. The company has a wide range of tangible and intangible resources which it can use to successfully internationalise. 23 The international market: growth prospects and level of competitiveness 23 This research sought to determine the growth prospects of the software development market in the Chinese transport sector and the level of competiveness that is currently prevalent in the market. Data collected from the interview with an executive of the company indicates that Itree is facing a considerable level of competition in all the markets that it operates in. The results of the interview indicate that the company faces stiff competition from the following three companies: Redflex, CEOS and Genx Venture. These companies provide products and services that are similar to what Itree provides. Furthermore, these companies operate in Australia and New Zeeland, meaning that they are direct competitors to Itree. 23 At the international level, Itree is facing direct competition from non-Chinese companies which are also expanding to the Chinese market. An example of a direct competitor of Itree in the Chinese market is QNX, a Canadian software developer that is rapidly expanding into the Chinese market. The strength of QNX lies in its long history in the field of developing different types of software for a wide range of industries (QNX, 2016). This attribute of the company makes it a very important competitor for Itree in the Chinese market. 24 In relation to the growth prospects of the industry, it has been pointed out that one of the biggest customers for software in China is the government (Tang 2016, p. 41). The Chinese government procures a large number of software for its many agencies. On a different note, it is noted that the software development market in China has been experiencing rapid growth since the 1990s (Huang 2011, p. 291). Therefore, these two factors – the rapid growth of the market into which Itree intends to expand and the presence of well established companies in the market – mean that Itree is likely to face intense competition in the market that is rapidly expanding with new opportunities. 24 Market risks and the suitability of the products of the company for the market 24 Results of the interview and evaluation of secondary information show that the products that are developed by Itree are suitable for the Chinese software market in general and the transport sector in particular. Furthermore, a company executive who was interviewed indicated that for Itree to embark on any expansion project, it has to conduct a feasibility study. It is based on the results of the feasibility study that the company is able to make important investment decisions. Lastly, Itree has modelled its products to serve the needs of government agencies (Itree 2016). What this means is that since Itree has been developing software for governments in Australia and China, it is likely that the software of the company will address the needs of the different agencies of the Chinese government. 24 However, the company faces a number of risks when expanding to China. Some of these risks are as a result of changes in the factors of the macro environment and how these changes affect companies that operate in China in general. These findings are consistent with what is pointed out in academic literature. For example, Harrison (2011, p. 5) observes that the political, social and economic environment in any country may present varying degrees of risk to the business organisations that operate in the country. 25 Furthermore, Papadavid (2016, p. 7) notes that as much as the rapid growth of the Chinese economy presents great economic opportunities for companies, there are still very many risks that companies which expand into China are set to experience. Specifically, Fogel (2010, p. 13) argues that one of the main risks that companies expanding into China face is related to the political situation in the country. It is argued that as much as the country is politically stable, the possibility of the government making decisions that can easily make it difficult for foreign-owned companies to effectively operate in the country remains relatively high (Fogel 2010, p. 13). Therefore, it can be seen that Itree, like many other companies that are expanding to china, faces a mix of opportunities that are accorded by the rapid rate of growth of the Chinese economy as well as a number of risks arising from possible changes in the factors of the macro environment in the country. 25 CHAPTER V: CONCLUSION AND RECOMMENDATIONS 26 Recommendations 26 Based on the findings of the research, the following recommendations are made. First, Itree is ready to expand its operations to the Chinese transport sector market. The resources and capabilities of the company can be harnessed to take advantage of the opportunity that exists in the market. The second recommendation is that the company needs to carry out a number of feasibility studies to determine the risks that are posed by changes in the political, cultural and even legal environment in the Chinese market. By doing so, it will be in a position to craft strategies which it may use to mitigate the effect of such risks. Third, the company needs to craft a highly effective strategy that it can use to beat the competition that already exists in the market. Given the growth prospects of the market, it is highly likely that the company will face stiff competitors and that its history of success in Australia and New Zeeland is not a guarantee of success in China. 26 Conclusions 27 This research was conducted to determine the extent to which Itree, a leading software developer for government agencies in Australia, is ready to expand its services to China. From the results of this study, it has been seen that the resources and capabilities of Itree match the opportunity that exists in the Chinese transport sector market. The company has a wide range of resources and capabilities which it can use to gain a sustainable competitive advantage. However, lack of a clear understanding of the risks that are posed by changes in the factors of the macro environment in China is an issue that needs to be addressed. 27 Future Scope 27 This research has concluded that Itree is able to expand to the international markets because its resources and capabilities match the opportunities that exist in the market. This conclusion has been reached based on an analysis of primary and secondary data collected, analysed and interpreted in the course of the research. However, two issues that were not adequately addressed but which require further research are related to how best the company can take advantage of the opportunities that exist in the market and the strategies that it can use to address the challenges that it is likely to encounter in the Chinese market. 27 References 28 Burgel, O 2012, The internationalisation of British start-up companies in high-technology industries, Springer, Hamburg. 28 Dachs, B, Stehrer, R & Zahradnik, G 2014, The internationalisation of business r & d, Edward Elgar, London. 28 David, J & Cariou, G 2014, ‘Evaluating the firm’s readiness for internationalisation: from the design to the application of an international qualification framework,’ International Journal of Business and Management, vol. 9, no. 7, pp. 1-9, viewed 14 July 2016, . 28 Delios, A 2012, International business: an Asia Pacific perspective, FT Press, London. 28 Durmaz, Y & Tasdemir, A 2014, ‘A theoretical approach to the methods of introduction to international markets,’ International Journal of Business and Social Science, vol. 5, no. 6, pp. 47-54, viewed 8 June 2016, . 28 Fogel, GK 2010, ‘Business environment in China: economic, political and cultural factors,’ viewed 14 July 2016, . 29 Hamidizadeh, MR & Zargaranyazd, R 2014, ‘Analyzing international readiness of small and medium-sized enterprises,’ Central European Business Review, vol. 3, no. 4, pp. 43-54, viewed 14 July 2016, . 29 Harrison, A 2011, ‘International entry and country analysis,’ viewed 14 July 2016, . 29 Heino, J 2008, Challenges of internationalisation: implementing business operations across borders, Bachelor thesis, Lahti University of Applied Sciences, viewed 12 July 2016, . 29 Huang, Y 2011, ‘Understanding the software industry in China: export performance and regional development,’ Journal of Emerging Knowledge on Emerging Markets, vol. 3, pp. 289-307, viewed 14 July 2016, via http://digitalcommons.kennesaw.edu/cgi/viewcontent.cgi?article=1048&context=jekem 29 Itree 2016, ‘Company,’ viewed 14 July 2016, . 29 Jung, S 2007, The relationship between international expansion and firm performance: an investigation of US-based restaurants and firms, MSc thesis, University of Nevada, Las Vegas, viewed 8 June 2016, viahttp://digitalscholarship.unlv.edu/cgi/viewcontent.cgi?article=1608&context=thesesdissertations 29 Kadric, E & Rangelova, T 2013, ‘When if a firm ready to go abroad? An analysis of sme internationalisation readiness,’ viewed 14 July 2016, . 29 Kazmi, A 2008, Strategic management and business policy, Tata McGraw-Hill, New Delhi. 29 Mattes, J 2010, Innovation in multinational companies: organisational, international and regional dilemmas, Peter Lang, London. 29 Merriam, SB & Tisdell, EJ 2015, Qualitative research: a guide to design and implementation, John Wiley & Sons, London. 29 Papadavid, P 2016, ‘China’s balancing act: why the internationalisation of the renminbi matters for the global economy,’ viewed 14 July 2016, . 29 Piscitello, L & Rabbiosi, L 2006, ‘How does knowledge transfer from foreign subsidiaries affect parent companies’ innovative capacity?’ Danish Research Unit for Industrial Dynamics, Research Paper no. 06-22, viewed 12 July 2016, . 30 Tang, Z 2016, ‘The future of Chinese software development,’ IEEE Software, January/February, 2016, pp. 40-44, viewed 14 July 2016, . 30 QNX 2016, ‘Qnx and Techkinetics begin major expansion into China,’ viewed 14 July 2016, . 30 APPENDICES 31 Executive Summary This research report analyses how Itree can expand to the international market for hi-tech software development products and services. In general, this is done by matching the capabilities, resources and strengths of the organisation with the opportunities and threats that exist in the high-tech software development products and services at the international level. The main question that is addressed in the research is how Itree can expand to the Chinese transport markets. The focus is on the field of advanced high-tech solutions in regard to compliance, regulation and enforcement. To address this issue, a qualitative research was conducted in which qualitative primary and secondary data related to the subject of the research was collected and analysed. The results of the research show that in relation to organisational readiness, Itree is well prepared to expand into the Chinese transport market. The company has a wide range of resources and capabilities which it can use to successfully enter the Chinese market. Further, the growth prospects of the Chinese software market in general and the fact that the company has been in the business of providing a wide range of software solutions to government agencies means that the products of Itree are suitable to the needs of the Chinese market. It is however, observed that the company is likely to face a number of risks arising from the competitive nature of the market on one hand and possible changes in the factors of the macro environment on the other. Finally, it is recommended that as much as the company is expanding to the market, it has to put in place measures that will help it to address the risks that are inherent in the market. CHAPTER I: INTRODUCTION Itree is a software development company which is currently based in Australia and New Zeeland. The company provides a wide range of software solutions and products to different types of clients, mainly large corporations and governments. Over the years, the company has developed its systems and processes to emerge as a specialist in the development of advanced high-tech software products and services which are used in regulation, compliance and enforcement activities of governments. Additionally, the products and services of the company are extensively used in the following industries: maritime, fisheries, rail transport, road transport and transport security. Over the years, Itree has been experiencing organic growth in terms of demand for its products and services (Itree 2016). This growth has been underscored by several factors, some of which are outlined as follows. First, the company has prioritised the need to meet the specific objectives of its customers. Using this approach has enabled the company to develop a reputation for developing highly effective software solutions that meet the expectations of its customers. The second factor that has enabled the company to experience rapid growth in the recent past is related to the manner in which the company has focused on producing high quality products and services. Third, the growth of the company has been enabled by a highly innovative approach to business that the company has taken. This has made it possible for the company to develop new products and services that address the changing needs of clients in the market. It is against this backdrop that the company has to make decisions about how to expand to international markets, particularly those markets that are related to the use of high-tech software solutions by government agencies for enforcement, regulation and compliance. Addressing this issue is the essence of this research. CHAPTER II: LITERATURE REVIEW Literature Review The issue of how Itree should expand to international markets can be seen within the context of internationalisation of business organisations. In theory, internationalisation is the process by which business organisations expand their operations and market their goods and services in markets that are located in different countries (Durmaz & Tasdemir 2014, p. 147). This means that as companies internationalise, the make decisions and take specific steps that help them to expand their operations to areas that are located outside their domestic areas. It has been argued that there are different factors that can motivate companies to expand their operations outside their domestic areas (Heino 2008, p. 7). According to Delios (2012, n.pag), companies are motivated to expand into international markets because they spot the unique opportunities that may arise in the international markets. Thus, as a result of the imperfections that exist in markets, opportunities may arise in different markets in the world and to take advantage of such opportunities, companies are required to internationalise their operations. The imperfect conditions that may exist in the market at different times and which may motivate companies to internationalise occur in different forms. For example, Kazmi (2008, p. 173) notes that issues such as lower tariff barriers, lower costs of manufacturing and the emergence of new demand for products and services in specific regions of the world are some of the issues that may encourage companies to internationalise and reap the economic benefits that are associated with the process. The manner in which companies can internationalise and the issues that they need to take into account when internationalising has also received academic attention. For example, it has been noted that companies are required to take into consideration their research and development capacity when making the decision and steps necessary to access different markets (Dachs, Stehrer & Zahradnik 2014, p. 10). The essence of this is that innovation is one of the main tenets that drive the success of business organisations (Dachs, Stehrer & Zahradnik 2014, p. 10). As such, companies that have very strong research and development activities tend to be highly innovative. This helps them to successfully develop products and services that address specific market needs at the international level. On a different note, Piscitello and Rabbiosi (2006, p. 2) tie the internationalisation of business organisations to the benefits that companies get from knowledge transfer. They argue that as a result of internationalisation, tacit and explicit knowledge is transferred between the subsidiaries and the headquarters of multinational corporations (MNCs) and this improves the overall performance of the companies over the course of time (Piscitello & Rabbiosi 2006, p. 2). Thus, it can be seen that companies internationalise as a way of taking advantage of market opportunities to reap economic benefits. Therefore, companies internationalise in response to different factors and in doing so, they need to have specific capabilities that will help them to benefit from the process. Theoretical Framework The theoretical framework of this research is based on the interaction between the dependent and independent variables. The dependent variable in this research is the decision of the company to expand its operations into international markets. This decision is affected by several factors, which form the independent variables. The independent variables can be summarised as the strengths and weaknesses of the company in relation to the need to internationalise and the threats and weaknesses that exist in the international market into which the company seeks to expand. It is important to note that these variables arise from the four key theories used in the research. The four theories used in the research are as follows: the theory of internationalisation, Porter’s Five Competitive Forces model, and the PESTLE and SWOT models. In the first place, the decision on how Itree should expand to international markets is based on the issue of what opportunities exist in the market and whether the company has all the resources that it needs to expand to those markets. According to Jung (2007, p. 10), companies require varying amounts of capital, among many other resources, when they go through the process of internationalisation. The variation is said to be based on whether companies are product or service-based (Jung 2007, p. 10). The nature of the international markets is analysed using the PESTLE and SWOT models. By analysing the effects of “political, economic, social, technological, legal and environmental” factors of the external environment, the trends, threats and opportunities that exist in the international markets to which the company plans to expand are explained. Similarly, Porter’s Five Competitive Forces model is used to analyse the nature of the industry and how this is likely to affect the decisions of the company in relation to the internationalisation process. The following is a depiction of how the dependent and independent variables of the research interact with each other. Interaction of dependent and independent variables of the research CHAPTER III: RESEARCH METHODOLOGY Statement of the Problem The proposed research will be carried out to address the problem of how Itree can expand to the Chinese transport markets in the field of advanced high-technology solutions in regulation, compliance and enforcement. To address this main problem, the issues of the extent to which the company is ready to expand to the international market will be addressed in this research. The first one is the extent to which Itree has the capacity to expand to the international market. Burgel (2012, p. 53) notes that companies need a unique set of resources in order to successfully expand their operations at the international level. Similarly, Mattes (2010, p. 271) notes that companies that internationalise need to have a level of innovativeness as well as organisational systems which can be used to take advantage of opportunities as well as address the risks that exist in international markets. Objectives The research is based on four specific objectives. These are outlined as follows. First, the research seeks to determine the extent to which Itree shows a level of organisational readiness that is suitable to help it to enter the international (specifically, Chinese) market. The second objective of the research is to determine the extent to which the products and services that are offered by the company are suitable to the needs of the market and the regulatory environment that is prevailing in international markets. Third, the research is based on the need to determine the current size of the Chinese transport market and its potential growth prospects. Fourth, the research seeks to determine the nature of the competitive environment in the Chinese transport markets. The fifth and last objective of the research is to determine the types and nature of potential risks that Itree will meet when expanding to the Chinese transport markets. Methodology From the problem definition of this research, it can be seen that in general, the research seeks to determine the extent to which Itree is ready to enter to the international market for its products and services. Hence, the research seeks to match the internal resources and capabilities of the company with the opportunities and threats that exist in the international market into which the company intends to expand. By doing so, the research seeks to identity the relationship between the strengths and weaknesses of the company and the opportunities and threats that exist in the international market and how this will affect the decisions and steps that the company has to make as part of its internationalisation process. Limitations In theory, qualitative research is associated with limitations such as overreliance on secondary data and the risk of misinterpreting the documents used (Merriam & Tisdell 2015, p. 180). This research is entirely based on qualitative data. Hence, the rigour that is associated with the analysis of primary quantitative data is not captured in this research. As well, by its nature, the research largely relies on secondary data in the form of information published in different forms. Thirdly, the research is conducted to be conducted within a time frame of 35 weeks. This time frame does not take into account the possibility of delays that may be caused by unforeseen circumstances. CHAPTER IV: ANALYSIS AND INTERPRETATION The level of organisational readiness This research sought to determine the extent to which Itree, as an organisation, is ready to internationalise and enter into the Chinese transport market. From the results of the observations carried out on the organisation, the detailed interview with a senior management executive of the organisation and a detailed review of secondary data that is related to the operations of the company, the following is a summary of the extent to which the company is ready to internationalise. First, the company has a considerable level of experience, having operated in the software development industry since its inception back in 1996 (Itree 2016). During the long period of time that the company has been in operation, the company has managed to gain a lot of experience and develop important partnerships. The second factor that determines the readiness of the organisation to internationalise is in the form of the core strengths of the company in regard to its capabilities and resources. The interview with the executive indicated that Itree values its knowledge and expertise in the industry and considers it as one of its key capabilities. Additionally, the company takes pride in its ability to handle big projects and that is why it is motivated to pursue projects whose budgets exceed US$ 1 million. What should be noted is that the capabilities and resources of the company correspond to what researchers describe as the most important criteria that can be used to judge the extent to which an organisation can successfully expand its operations to international markets. For example, David and Cariou (2014, p. 7) note that things such as the level of competence of the management team of an organisation, the value of its relationships and the extent to which the organisation has the financial and technical means to expand are important considerations. Similarly, Hamidizadeh and Zargaranyazd (2014, p. 45) note that the international readiness of a company can be measured in terms of the extent to which the company has put in place marketing, functional and managerial processes that can be relied upon during the internationalisation process. All these aspects, which are related to the specific attributes of a company and how the attributes can help a company successfully internationalise, arise from concepts of the theory of internationalisation (Kadric & Rangelova 2013, p. 28). Therefore, based on the data collected, Itree can be said to have met nearly all the important criteria for internationalisation. The company has a wide range of tangible and intangible resources which it can use to successfully internationalise. The international market: growth prospects and level of competitiveness This research sought to determine the growth prospects of the software development market in the Chinese transport sector and the level of competiveness that is currently prevalent in the market. Data collected from the interview with an executive of the company indicates that Itree is facing a considerable level of competition in all the markets that it operates in. The results of the interview indicate that the company faces stiff competition from the following three companies: Redflex, CEOS and Genx Venture. These companies provide products and services that are similar to what Itree provides. Furthermore, these companies operate in Australia and New Zeeland, meaning that they are direct competitors to Itree. At the international level, Itree is facing direct competition from non-Chinese companies which are also expanding to the Chinese market. An example of a direct competitor of Itree in the Chinese market is QNX, a Canadian software developer that is rapidly expanding into the Chinese market. The strength of QNX lies in its long history in the field of developing different types of software for a wide range of industries (QNX, 2016). This attribute of the company makes it a very important competitor for Itree in the Chinese market. In relation to the growth prospects of the industry, it has been pointed out that one of the biggest customers for software in China is the government (Tang 2016, p. 41). The Chinese government procures a large number of software for its many agencies. On a different note, it is noted that the software development market in China has been experiencing rapid growth since the 1990s (Huang 2011, p. 291). Therefore, these two factors – the rapid growth of the market into which Itree intends to expand and the presence of well established companies in the market – mean that Itree is likely to face intense competition in the market that is rapidly expanding with new opportunities. Market risks and the suitability of the products of the company for the market Results of the interview and evaluation of secondary information show that the products that are developed by Itree are suitable for the Chinese software market in general and the transport sector in particular. Furthermore, a company executive who was interviewed indicated that for Itree to embark on any expansion project, it has to conduct a feasibility study. It is based on the results of the feasibility study that the company is able to make important investment decisions. Lastly, Itree has modelled its products to serve the needs of government agencies (Itree 2016). What this means is that since Itree has been developing software for governments in Australia and China, it is likely that the software of the company will address the needs of the different agencies of the Chinese government. However, the company faces a number of risks when expanding to China. Some of these risks are as a result of changes in the factors of the macro environment and how these changes affect companies that operate in China in general. These findings are consistent with what is pointed out in academic literature. For example, Harrison (2011, p. 5) observes that the political, social and economic environment in any country may present varying degrees of risk to the business organisations that operate in the country. Furthermore, Papadavid (2016, p. 7) notes that as much as the rapid growth of the Chinese economy presents great economic opportunities for companies, there are still very many risks that companies which expand into China are set to experience. Specifically, Fogel (2010, p. 13) argues that one of the main risks that companies expanding into China face is related to the political situation in the country. It is argued that as much as the country is politically stable, the possibility of the government making decisions that can easily make it difficult for foreign-owned companies to effectively operate in the country remains relatively high (Fogel 2010, p. 13). Therefore, it can be seen that Itree, like many other companies that are expanding to china, faces a mix of opportunities that are accorded by the rapid rate of growth of the Chinese economy as well as a number of risks arising from possible changes in the factors of the macro environment in the country. CHAPTER V: CONCLUSION AND RECOMMENDATIONS Recommendations Based on the findings of the research, the following recommendations are made. First, Itree is ready to expand its operations to the Chinese transport sector market. The resources and capabilities of the company can be harnessed to take advantage of the opportunity that exists in the market. The second recommendation is that the company needs to carry out a number of feasibility studies to determine the risks that are posed by changes in the political, cultural and even legal environment in the Chinese market. By doing so, it will be in a position to craft strategies which it may use to mitigate the effect of such risks. Third, the company needs to craft a highly effective strategy that it can use to beat the competition that already exists in the market. Given the growth prospects of the market, it is highly likely that the company will face stiff competitors and that its history of success in Australia and New Zeeland is not a guarantee of success in China. Conclusions This research was conducted to determine the extent to which Itree, a leading software developer for government agencies in Australia, is ready to expand its services to China. From the results of this study, it has been seen that the resources and capabilities of Itree match the opportunity that exists in the Chinese transport sector market. The company has a wide range of resources and capabilities which it can use to gain a sustainable competitive advantage. However, lack of a clear understanding of the risks that are posed by changes in the factors of the macro environment in China is an issue that needs to be addressed. Future Scope This research has concluded that Itree is able to expand to the international markets because its resources and capabilities match the opportunities that exist in the market. This conclusion has been reached based on an analysis of primary and secondary data collected, analysed and interpreted in the course of the research. However, two issues that were not adequately addressed but which require further research are related to how best the company can take advantage of the opportunities that exist in the market and the strategies that it can use to address the challenges that it is likely to encounter in the Chinese market. References Burgel, O 2012, The internationalisation of British start-up companies in high-technology industries, Springer, Hamburg. Dachs, B, Stehrer, R & Zahradnik, G 2014, The internationalisation of business r & d, Edward Elgar, London. David, J & Cariou, G 2014, ‘Evaluating the firm’s readiness for internationalisation: from the design to the application of an international qualification framework,’ International Journal of Business and Management, vol. 9, no. 7, pp. 1-9, viewed 14 July 2016, . Delios, A 2012, International business: an Asia Pacific perspective, FT Press, London. Durmaz, Y & Tasdemir, A 2014, ‘A theoretical approach to the methods of introduction to international markets,’ International Journal of Business and Social Science, vol. 5, no. 6, pp. 47-54, viewed 8 June 2016, . Fogel, GK 2010, ‘Business environment in China: economic, political and cultural factors,’ viewed 14 July 2016, . Hamidizadeh, MR & Zargaranyazd, R 2014, ‘Analyzing international readiness of small and medium-sized enterprises,’ Central European Business Review, vol. 3, no. 4, pp. 43-54, viewed 14 July 2016, . Harrison, A 2011, ‘International entry and country analysis,’ viewed 14 July 2016, . Heino, J 2008, Challenges of internationalisation: implementing business operations across borders, Bachelor thesis, Lahti University of Applied Sciences, viewed 12 July 2016, . Huang, Y 2011, ‘Understanding the software industry in China: export performance and regional development,’ Journal of Emerging Knowledge on Emerging Markets, vol. 3, pp. 289-307, viewed 14 July 2016, via http://digitalcommons.kennesaw.edu/cgi/viewcontent.cgi?article=1048&context=jekem Itree 2016, ‘Company,’ viewed 14 July 2016, . Jung, S 2007, The relationship between international expansion and firm performance: an investigation of US-based restaurants and firms, MSc thesis, University of Nevada, Las Vegas, viewed 8 June 2016, viahttp://digitalscholarship.unlv.edu/cgi/viewcontent.cgi?article=1608&context=thesesdissertations Kadric, E & Rangelova, T 2013, ‘When if a firm ready to go abroad? An analysis of sme internationalisation readiness,’ viewed 14 July 2016, . Kazmi, A 2008, Strategic management and business policy, Tata McGraw-Hill, New Delhi. Mattes, J 2010, Innovation in multinational companies: organisational, international and regional dilemmas, Peter Lang, London. Merriam, SB & Tisdell, EJ 2015, Qualitative research: a guide to design and implementation, John Wiley & Sons, London. Papadavid, P 2016, ‘China’s balancing act: why the internationalisation of the renminbi matters for the global economy,’ viewed 14 July 2016, . Piscitello, L & Rabbiosi, L 2006, ‘How does knowledge transfer from foreign subsidiaries affect parent companies’ innovative capacity?’ Danish Research Unit for Industrial Dynamics, Research Paper no. 06-22, viewed 12 July 2016, . Tang, Z 2016, ‘The future of Chinese software development,’ IEEE Software, January/February, 2016, pp. 40-44, viewed 14 July 2016, . QNX 2016, ‘Qnx and Techkinetics begin major expansion into China,’ viewed 14 July 2016, . APPENDICES STUDENT PROJECT QUESTIONS BUSINESS RESEARCH PROJECT – MGNT 922 – Sydney Business School (UOW) 1. We would like to have Itree’s annual report for the past three years. If Itree does not publish an annual report, some information related to R&D, profit or sales growth rate could also help us. I will not be able to provide annual report. What I can say is that the projected sales growth rate for next FY – 10% 2. Do you have examples of detailed case study with current clients (This information is available on request according to Itree’s website) Our contract not allowing us to provide case study without customer permission. We are currently working on a few case studies – but these won’t be available 2-3 months from now. 3. Regarding RTA, what are the competitors for this client, if there are any? In regards to RMS, we do not have Direct competitors for the full solution. but these are the competitors on a few components that we identified – Genix Venture, Redflex, CEOS 4. Itree’s website provides information of their customers. Are there any other customers who are not listed on Itree’s website? Is it possible for Itree to give us list of their current customers .This will help us to understand current market segments Queensland Rail, Ministry for Primary Industries, Sydney Train 5. What are the major competitors for Itree in terms of the transport sector and in other market and product segments? Oracle, DataComm, Bentley, Pitney Bowes Various DynamicCRM solution providers. 6. Does Itree have enough funds to invest globally? Without understanding the feasibility and the cost to invest, we can’t answer the question The feasibility study is the first step which is what we are hoping to achieve on this project. 7. What are the functions of Itree’s systems that can be used or fit into the Australian Postal Industry We have never explored Australian Postal. Therefore, can’t comment accurately. 8. How often does Itree update its software in the past 20 years? Our updates are based on clients appetite – in general, we aim for quarterly update for minor and annual for major update. 9. What kind of products or services can Itree offer the hospital sector? We have never explored hospital sector closely. 10. Do you have any competitors or rivals survey or research? Yes. We have competitors. 11. What is your current business portfolio and organization structure? Org structure Corporate Services –Finance, Admin, HR Product – Product Development, Configuration, Customisation, Delivery Professional Services Project Management Office – project management Internal IT 12. How many years do you spend when you realized the new software that related with regulation enforcement ad compliance? Need clarification 13. What kind of products and services does Itree offer to fishery industry as to help its security and providing services solution regarding issues in fishery industry? We offer inspection solution, case management, offence management and intelligence management 14. What is your system advantages compare to other systems in fishery industry? End-to-end solution from inspection to prosecution. 15. How long has your system been running in the fisheries industry? Do you find it hard to maintain the system while keeping with the regulation? 2 years. Yes, it’s hard but we are continuing to work with our client to achieve good outcomes for both orgs. 16. What is the limitation regarding products, services or information/data that the companycurrently offer the fishery industry especially in NSW,Australia? We currently do not have fishery solution up and running in NSW. We do have one in NZ. The limitation or the challenge will be to be able to config/customise the existing solution to the NSW requirements that is within their budget. 17. What do you consider the strengths and weaknesses at iTree in terms of project implementation? Are there any downfalls in past project implementation that you would like to mention? Strengths are our expertise and knowledge due to number of years. Weaknesses / challenges – managing the resources peak to bring value add to the client. 18. In regard to resources and capabilities, what you consider the most important tangible and intangible resources in iTree? Let’s see if I understand this question correctly Tangible – people, office Intangible – our product 19. When embark on project implementation for clients what are the key resources iTree most struggle to cope with in relation to its resources (finance, personnel, lack of knowledge etc) Customer facing – especially on understanding the customer requirements and perform gap analysis or solution based on technology we have. 20. Besides the close relationship and tailored services to existing client, what are the other main competitive advantages iTree? Tailored services – I would not say as our competitive advantage. I believe it is our knowledge and understanding due to number of years on this industry. 21. In terms of Project Implementation Services, what factors do you believe hinder market potential? Which market? If overseas, would be the presence or geographical – because it increases the cost of implementation. 22. In terms of Project Implementation Services, what do you consider the main constrains (time or resources) that is hard to deal with and why? Same as q 19 23. How much money do you ask upfront (%) in order to start a project? What is your expectation on ROI and the payback period on projects Each client is different – in general, 10-15%. As we are private company, we expect to make profit on each project. The appetite for ROI more than 12 months is low. 24. For a new project, how many staff will you need form to finish the project? Various of the project size. In average a new project from new client, require 10 FTEs. 25. What are the advantages and disadvantages of the company when considering international market entry or new segments in other industries e.g.schools , logistics or childcare. We are not looking to go to other industries. We prefer to go to the same or related industry in the next 18 months. 26. How much difference does ITree allow between the base product and the new product after changes? 20% will be ideal. 27. Does Itree have professionals who have the expertise of designing and implementing software that may work for hospitals? Do you see this as a potential market segment? Not at this stage. This is something that we can have a look 18-24 months from now. 28. What are the strengths of Itree’s software that can be expanded in to such sectors as Australia post to improve their services in order to create value for customer? Same question was asked. 29. From Itree’s point of view, what are the major weaknesses, technically? We do not have cloud offering as yet. User interface for users to be able to perform basic configuration. The current process is a cumbersome for non-technical users. 30. What is the product life-cycle of an individual product? Analysis -> Design -> Build -> Testing -> Deploy -> Support & Maintenance (continuous improvements) 31. How frequently are systems updated with clients? Same question as previously 32. What is the average budget for a project? For our product, we are looking for opportunities that have budget >$1M per annum. 33. A campaign names “MAKE IT INDIA” was launched in December 2014. The focus of the campaign is to attract as much foreign investment as possible. Is the company aware of the campaign? If yes, did you considerate it as an opportunity? Do you see India and China as potential market opportunities and why? No, we are not aware. As part of this exercise/project is to understand the opportunities. The answer is that we will consider them after assessing the result of your finding on this project. 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