Entry into Foreign Market - Essay Example

? Entry into Foreign Market of the al Factors al factors in a country includes commitment, capa and corporate governance practice and they have a strong influence on the level and effectiveness on business activities (World Bank 2011).These institutional factors need to be considered while entering into foreign market for investment purposes. In this context it is observed that Cameron International plans to penetrate further into the markets of Myanmar. The company already has a minor presence in the markets of Myanmar and plans to expand further through effective marketing strategies. There are various institutional and risk factors that would pose a problem while entering into the markets of Myanmar and this is because the country is still in its nascent stage of development. One of the major factors that would be a hindrance for Cameron International Corporation (CIC) while entering into Myanmar markets would be its overdependence on the US markets, which signifies the company activities, will be largely dependent on the performance of the dual economy. Other factors are the rich untapped resources and the frequent electricity problems faced by the country, which poses a problem in the smooth execution of the business activities. Moreover, the country has been a reason of heated debacle for violation of human rights. The country has been weakly involved in international and community benefit activities. This has posed as a problem in the marketing activities because the climate for business activities is considered highly inactive and least productive. Apart from these problems, it has been noticed that Myanmar was never the subject of universal sanctions by United Nations and most of the Organization for Economic Co-operation and Development (OECD) countries imposed their own travel, political and economic sanctions. Companies entering into Myanmar markets need to consider these factors while penetrating into the markets. Value Rarity Imitability Organization Analysis The Value Rarity Imitability Organization (VRIO) framework was developed by Barney and Hesterley, which is instrumental in examining the internal environment of the company (Chapman, 2011) .The VRIO framework basically, lays emphasis on four important areas: a) The question of value: Whether the resource of the company is sufficient to exploit an environmental opportunity or be able to neutralize an environmental threat (Chapman, 2011). b) Question of Rarity: Are the resources of the company presently controlled by other small competing companies (Chapman, 2011). c) Question of Imitability: Do the companies face difficulties in cost advantage in developing or obtaining it (Chapman, 2011). d) Question of organization: Have the policies and procedures of the company organized systematically to support the exploitation of valuable, rare and expensive to imitate the resources (Management Mania, 2013). The evaluation of various resources of CIC would be as follows: Tangible Financial CIC is one of the most profitable drilling equipment manufacturers which have successfully completed various drilling projects for the renowned companies of varied nations. Physical CIC has made a strong presence with the manufacturing of 80 brands in more than 300 locations around the world. Technological The company has installed state of the art machineries and control equipments meant for oil drilling, control instrumentation and various other process operations. Organizational The company has developed in built effective strategies meant for its various onshore activities in ultra deepwater discoveries (Cameron, 2013a). Intangible Resources Human Presently, CIC boasts of a diverse workforce with more than 27000 employees globally. Innovation & Creativity One of the major objectives of the company is to design leveraging tools which lessens the burden of extracting crude oil onshore and offshore. Reputation The company has been successful in drilling and compressing activities without hampering the environment and preventing environmental degradation (Cameron, 2013b). Resource Characteristics Strategic Implications Valuable Rare Costly to Imitate Organization Exploits it Impact on Economy SWOT Category Financial Yes Yes Strength Physical Yes Yes Yes Strength Human Yes Yes Yes Strength Organizational Yes Yes Yes No Weakness Innovation & Creativity Yes Yes Yes Opportunity Human Yes Yes Strength Existing Cultural Issues in Myanmar Presently, Myanmar is facing various kinds of social and economic tensions, which have hampered the national unity of the country (AFG Venture, 2013).This has led to major downfall in the economical development and decrease in various economic opportunities. 90 percent of the population follows Buddhism and the cultural and social values are based on Theravada Buddhism. Gender biasedness is also prevalent to a large extent in the Myanmar society (BEWG, 2011). The country has been facing severe challenges because initially it was under the control of military regime, which has compelled the people to adapt to a particular lifestyle (Steinberg, 2000). Firstly, the management of CIC should understand and analyze the cultural variations in Myanmar which will help the company in studying the attitude and behavior of the common people. Secondly, the company should adopt several techniques which will help in understanding marketing dynamics and also adjust to it accordingly. Modeling techniques like Delphi methods will help in assessing the market requirement and developing strategies accordingly. Finally, the company should adopt a clear communication model which would help the employees to understand the importance of work ties over cultural ties and also provide clear instruction process. Subcontracting in Myanmar After assessing the current scenario in Myanmar it is advisable for CIC to opt for subcontracting techniques (WiseGeek, 2011).The subcontracting technique is a type of job contract, which will help in outsourcing certain type of work to other companies (WiseGeek, 2011).The method is usually adopted by the construction companies and the small companies receive a subcontract or federal contract over $500,000 (OAMP, 2013). The subcontracting method would help CIC to penetrate into the Myanmar markets further and make a strong footing. In this context the prime subcontractor would be CIC and various other subcontractors supplying raw materials and managing the process would be considered having an important role in the supply chain system. This would also help in simplifying the process of the business activities by adding separate percentage goals for each and every business category, description of the efforts made by CIC to ensure that even small business units have equitable opportunity, assurances that the company will have more subcontracting plans than its competitors. The smaller business units will ensure that the business will comply with the legal and federal reporting requirement and submit the SF 294 and 295 respectively just like the prime contractors do. Recommendations for Joint Venture Since, the company is not engaging with FDI it is necessary that the company should opt for joint venture with a reputed company. Given the current scenario of Myanmar it would be advisable if CIC opts for joint venture partnership with reputed oil drilling company like National Oilwell Varco Inc would be suitable for further penetration into Myanmar markets. This would serve purposeful because National Oilwell Varco Inc is known for its excellent mechanization facilities in deepwater and offshore capabilities. Both the companies need to take an initiative to develop strategies which require leveraging of technologies and energy. The companies need to mutually decide upon the various strategies and delegate their functions accordingly. National Oilwell Varco Inc has expertise in the oil drilling capabilities and developing control systems that would help in checking the development of products as per specific requirements and quality standards. The company should look after the drilling and leveraging areas and the managerial decision making should be looked after CIC. Challenges & Strategies for the Challenges From the current scenario of Myanmar it is observed that the common people of the country is facing severe economical and social crisis. The present government of Myanmar would require corporate assistance in improvisation of the present economical and social scenario. Three definite challenges have been identified by CIC and the management needs to address these concerns immediately. Firstly, the country faces insufficient power generating capacity and only 26 percent has access to electricity in Myanmar (Bangkok Post, 2013) Although, the government is trying to increase the capacity by 16000 Megawatts by the end of 2030 it would require corporate assistance (Bangkok Post, 2013). This problem can be solved by accessing the untapped resources and CIC can assist the government with its efficient manpower planning. The company boasts of an intellectual engineering team which has the capacity of providing assistance in terms of detailed engineering concept, drilling, installation and commissioning concepts (Cameron, 2013c). Secondly, CIC needs to identify the cultural differences and variations of the host and parent company and compare it with Hofstede cultural dimensions. The Hofstede cultural dimensions would be sufficient in providing an insight into the cultural variations and the areas that needs to be addressed immediately. Thirdly, It is observed that the branches of CIC in Thailand, Myanmar and Malaysia are small and do not have the necessary resources for further development. Import of raw material and other equipments would turn out to be a costly procedure because of the increase in the export prices, subsidies etc. The company needs to develop Myanmar by ensuring the installation of the necessary equipments and other technological requirements. Reference List AFG Venture. (2013). AFG Venture group dispatches. Retrieved from http://www.afgventuregroup.com/dispatches/afg-venture-group-newsletter/some-tips-before-venturing-into-the-myanmar-market-for-the-first-time-trevor-wilson-visiting-fellow-on-myanmar-burma-dept-of-political-social-change-school-of-international-political/ Bangkok Post. (2013, June 3). Investing in Myanmar’s power market requires a strategic approach. Bangkok Post. Retrieved from http://www.bangkokpost.com/business/news/353220/investing-in-myanmar-s-power-market-requires-a-strategic-approach BEWG. (2011). Burma’s environment: People, problems, policies. Retrieved from http://www.bewg.org/pubs/finish/4/34 Cameron. (2013a). About Cameron. Retrieved from http://www.c-a-m.com/forms/AboutUs.aspx Cameron. (2013b). Cameron’s corporate responsibility. Retrieved from http://www.c-a m.com/forms/Responsibility.aspx Cameron. (2013c). Annual report. Retrieved from http://www.c-a-m.com/InvestorsDoc/2012%20Annual%20Report_1fc62ad8-a436-4016-bd33-82432de12d66.pdf Chapman, R. (2011). VRIO analysis. Retrieved from http://onlinelibrary.wiley.com/doi/10.1002/9781118467206.app9/pdf Management Mania. (2013). VRIO analysis. Retrieved from https://managementmania.com/en/vrio-analysis OAMP. (2013). Subcontracting. Retrieved from http://oamp.od.nih.gov/ProgramNotes/Subcontracting/SubcontractingFactSheet/subcontracting_fact_sheet.htm Steinberg, D.I. (2000). The problems of Myanmar and Myanmar’s problems. Retrieved from http://www.ibiblio.org/obl/docs/Steinberg-Myanmar's_problems.htm WiseGeek. (2011). Subcontracting. Retrieved from http://www.wisegeek.org/what-is-subcontracting.htm World Bank. (2011). Institutional factors. Retrieved from http://web.worldbank.org/WBSITE/EXTERNAL/EXTOED/EXTGPAA/0,,contentMDK:22738126~pagePK:64829573~piPK:64829550~theSitePK:7476660,00.html. Read More