International Business: Bubble Tea's Thailand Entry Strategy Report

This report provides a comprehensive analysis of Bubble Tea's potential market entry strategies in Thailand. It identifies licensing as the most suitable entry mode, emphasizing its advantages in the Thai market, such as investor interest and streamlined legal processes. The report contrasts this with exporting, which is deemed less effective due to potential cost implications. It delves into Bubble Tea's internal strengths, including product quality, competitive pricing, and experience in developing markets, while also acknowledging weaknesses like investor shortages, a lack of technology skills, and organizational structure inefficiencies. Mitigation measures are proposed to address these weaknesses, such as adopting hi-tech technology and enhancing training programs. The report also outlines operational strategies, corporate objectives, and capital requirements, along with staffing policies for successful expansion. It highlights the importance of adapting to the local market and leveraging the company's core competencies to achieve a competitive advantage. The report concludes with a discussion of the challenges and opportunities associated with entering the Thai market, providing a strategic framework for Bubble Tea's international expansion.

INTERNATIONAL
BUSINESS MANAGEMENT

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Contents
Introduction...........................................................................................................................................1
Entry mode............................................................................................................................................1
Second best strategy..............................................................................................................................2
Internal strength.....................................................................................................................................3
Weaknesses of the firm..........................................................................................................................4
Mitigation impact of the weakness........................................................................................................5
Operational strategy and corporate objectives.......................................................................................7
Organisational design............................................................................................................................7
Scope of expansion................................................................................................................................8
Financial capital requirements...............................................................................................................8
Staffing policy.......................................................................................................................................8
Conclusion.............................................................................................................................................8
References.............................................................................................................................................9

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Introduction
Bubble Tea has done good business in different parts of the world and it is trying to expand in
new regions of the world. For any expansion it is critical to choose the entry mode
strategically. This is because it is the entry mode that is selected by a company acts as a base
for the future strategies. There are different strategies being used by the company and all
depends on the organisation promotes itself or the way in which they attract their consumers.
Every entry mode has their own strengths and weaknesses hence selection of every strategy
has to be on the basis of products that is sold by the company and the resources they have
(Macfarlane & Macfarlane, 2011). It is critical that a company understands the strengths and
weaknesses it has as it is critical for understanding its success in any market and accordingly
take mitigation measures against it. In order to be successful, it is critical that every firm
designs its own operate strategy and corporate objectives. This report is going to discuss the
best entry mode for Bubble tea in Thailand along with the second best strategy for entry. It
also discusses the strengths and weaknesses of the firm along with the mitigation measures
that could be taken for mitigating the impact of the weaknesses. It also discusses the
operational strategy and corporate objectives of Bubble Tea. In the latter section of the report
a discussion about capital consideration that will be utilised by the firm will be analysed
along with the staffing policy that can be used by the firm.
Entry mode
Entry mode needs to be designed according to the requirements of the company and the
environment that is present in the industry. It is critical for the management to select
appropriate strategy that can give competitive advantage to the firm. Since Thailand is an
emerging market hence all the type of entry mode strategies can be used by the company.
Among all the strategies that are available, the best strategy that can be used by the company
is licensing (Poapongsakorn, 2011). Thailand has lots of investors who are ready to invest in
new kinds of business and hence they will be able to take license of the Bubble Tea. He
licensing will be provided for selling and marketing of the products. The firm that will be
selected for this licensing will be the firm that has good distribution network in the beverage
industry. The selection of this partnership is critical to maintain the balance between the
requirements of the firm and the trends in the market. It is critical for the management. This

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can be an effective strategy just one thing needs to be considered while choosing the
company is that the purchaser of the license needs to have larger market share.
This entry mode is also justified because it will allow the Bubble Tea to make fast expansion
within the country. It is also to be noted that licensing has become easier in the Thailand as
the country has made their legal complications easier for the companies that aims to take sell
their license in the country (Ichijo, & Ranta, 2016). Since there are many multi-national
companies that are coming within the country hence investors are also ready to take licenses
and take all these as an opportunity.
Second best strategy
The second best strategy that can be used by the company is exporting. Utilising this strategy
the company could have just exported their production products in this Thailand while the
company can remain producing the products in their country. However this was a rejected
strategy as the export can be an expensive strategy to deal with. Exporting allows the
company to reduce the cost of establishment but on the other hand excessive taxes by the
Thailand government on the imported products could increase the overall cost of the product
and hence the selling price also increases. This will reduce the company’s chances of gaining
competitive advantage over the rivals (Gubbi, Aulakh, Ray, Sarkar & Chittoor, 2010). In the
markets like Thailand where the competitive pricing is an effective strategy to gain success in
the market due to nature of the people’s buying behaviour in Thailand.
Advantage of licensing
 It creates opportunities for the Bubble Tea to generate passive income. The licensee
company makes the company and the owner of the intellectual property i.e. Bubble
tea earns the benefits of giving the license. The tension on the side of the company
reduces to half as the operational tension remains with the company that purchases the
license (Pongsiri, 2013).
 It makes the entry easier as the tariff barriers to entry can be avoided as a domestic
firm is using the IP.
 It allows a company to adopt uniqueness in the marketing approach.
Disadvantages of licensing

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 It enhances the chances of exposing the intellectual property to getting theft. Long
term licensing allows the local licensers to learn the intellectual property and about
their products hence there is chance of misuse and piracy as the owners do not have
full control over the products.
 It creates dependency on licensor so as to become successful in that market.
 It is offered for a limited time period of time and may lead to royalty litigations.
Advantages of exporting
 One can significantly enhance the market without being dependent on any single one
and it also removes intermediaries.
 It helps the company in making changes in the product outside Thailand and hence
exporting makes it easier for the company to export only those products that is
gaining benefits in the market and hence leading to larger economies of scale and
better margins (Nibusinessinfo.co.uk, 2019).
Disadvantages of exporting
 It can divert focus of the company from their own market and administration costs
might also rise as the export regulations while trading in Thailand.
 More time, money and human power is required for cultivating a good customer base.
 Due to difference in cultures between the parent country and Thailand, this entry
mode could create challenges for the company.
Internal strength
For making of the strategies, it is critical for any company to understand the internal strengths
that they have. This is necessary for gaining competitive advantage over the rivals. The
strength or the core competencies of the company are stated below:
 Product quality: The product quality is highly good and the taste of the food is like by
many people in different parts of the world due to the taste that it offers and the
customisation that can be done. At the same time company is making innovations in
that product so as to make it more innovative and healthy.
 Competitive pricing: The pricing of the product is kept competitive which will allow
them to penetrate in the market at much faster rate. Such pricing is possible due to the

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low cost production in the parent nation (Lin & Wu, 2016). Such strategies are also
helpful for enhancing the market share in any new market at much faster rate.
 Experience of working in developing markets: Experience of working in the
international markets and at the same time achieving successes in these markets is not
easier for the company. The experience in the developing markets is much larger
especially in the bigger developing nations such as China.
 Skilled employees: Company has highly skilled employees that helps them in adding
value to the products and also enhances the efficiency of the processes.
 Research and development: They have well established research and development
unit that is capable of leading the company to new kinds of changes in the product and
they are also capable of designing the products as per the requirements of the market
(Sangsubhan, 2010). This is the major reason why the company is able to launch so
many varieties of products at once in the market. This allows the company to target
different segments in the market.
 Supply chain: They have an excellent supply chain management system that allows
the company to manage the operations in an effective manner. The have large
numbers of local distributors in different markets. However there is lesser utilisation
of technology which could be improved. This company can train their franchisers
with their knowledge of the supply chain management which they can use for
reaching deeper into the market. Since the demand is highly fluctuating in today’s
time hence it is critical for the management to make sure that they have an effective
supply chain management.
Weaknesses of the firm
There are certain weaknesses also that are attached with the firm. Some of them have been
highlighted below:
 Investor’s shortage: Numbers of investors that needs to be available with the firm for
foreign projects is less. This investor shortage is creating challenges for the company
in the time when the world economy is not providing environment for any expansion.
This is also a challenge because their bigger competitors like Costa coffee, Café
coffee Day and Starbucks etc.
 Lack of technology skills: Employee’s profiles like technology skills are slightly on
the lower side. In the time when other company employees have become highly

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trained over the years hence their productivity is on the higher side (Hessels & van
Stel, 2011). In the international market expansion this can be a serious problem as it
will make the process difficult at the international operational level.
 Organisational structure: The organisational structure that is used within the
organisation is not appropriate. This is because there is lack in the organisational
structure which is not allowing the firm to make their operational process easier. The
current organisational structure of the company is hierarchical which is not allowing
the firm to make the flow of communication easier. In the international business
communicational barriers could be a serious challenge for the success. In order to
improve that information flow and in order to maximise the efficiency of the work
process, it is critical to make the organisational structure to be more adaptive to the
new country and flexible as well which is necessary for the success within the
organisation (Moghaddam, Sethi, Weber & Wu, 2014). The hybrid organisational
structure allows the firms to manage their operations in a smoother manner.
 Training and development: In the time when the training and development is highly
essential for managing skills of the workplace hence it critical for the management to
make sure that they have training and development program of world standards. The
training and development will allow the company will have to manage their
operations at international level. Training about inter-cultural communication is very
much critical for the management as it allows the company to manage the skills of the
individuals and hence they add value to the operations of the firm.
 Lack of political support: In the time when the political environment across the globe
is not so healthy, it becomes essential for the companies to have political backups so
as to mould policies according to their need. This will also help in managing the
licensing contract within the organisation.
Mitigation impact of the weakness
It is essential that organisation works on its weaknesses. In order to do this the mitigation
measure that can be used by the company so as to remove the weaknesses that this firm is
facing.
 Hi-tech technology: Since it is the age of the technology, and in the environment
analysis also it is seen that in Thailand the companies that uses hi-tech technologies
are more successful. In this regards, it is also critical for the management to make sure

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that they have an effective technologies that allows the company to maintain the
efficiency in the workforce. The hi-technology will not only enhance the decision
making speed of the company but also helps the company in managing their business
with more control especially in terms of managing their relationship with the licensee
company (Udomkit, 2017).
 Kaizan: It is critical that even after the company aims to franchise their business in
Thailand they need to ensure that their products have the quality of higher standards.
Continuous quality improvement allows the company to manage their standards in
any market (Jain, Lahiri & Hausknecht, 2013). Implementing the strategies such as
Kaizan and lean manufacturing will allow the firm to manage the way in which they
are dealing with the quality they are offering now and quality standards that they need
to match.
 Make political relationships: In order to make trade and business easier it is critical
that firm makes political relationships with different government by the means of
collaborative working certain areas such as skill development and new job
opportunities. In today’s time governments prefer those companies that are providing
more jobs. This will also allow the company in gaining some tax exemptions which
might allow them to enhance their profits.
 Diversify the brand: In order to create a big brand name in a new market, it is critical
for the company to diversify its brand image. This can be done by adding more
numbers of product lines in the brand. This will also allow the company to attract
more numbers of people towards the brand and at the same time it enables the
company to satisfy the needs of the larger audience in Thailand. Diversifying also
means to improve the ways in which companies are dealing with the needs of the
local market (Chen, 2015). This company will have to make sure that they have taken
care of the local needs in their product.
 Adding local culture: It is to be understood that however may be the globalisation
penetrated into the societies, people still love their own culture. In order to deal with
this, it is critical that this firm should add local cultural aspects in their operational
areas such as marketing and sales. The franchise firms should put concentration
towards this as cultural aspect was one of the major reasons why licensing has been
chosen. They need to find local investors as well.

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Operational strategy and corporate objectives
The operational strategy that is used by the firm is as follows:
 Pricing strategy: The pricing needs to be on the lower side. This needs to be reduced
lower than that of their competitors so that they can improve their growth in the
market (Lei, 2016). The pricing strategy has to be flexible so that it can be adjusted
according to the challenges that are faced by the firm.
 Legal strategy: This Company needs to check all the litigations in the Thailand and
accordingly they comply with the entire legal obligation so as to ensure that their
business remains legally active. All legalities also need to be followed for making the
franchise deals (Morschett, Schramm-Klein & Zentes, 2015).
 Marketing strategy: The marketing strategy that is used by the company has to have
multiple approaches i.e. they need to adopt marketing both traditional and digital.
This digital marketing strategy has to be given more priority and the franchise firm
should have the better knowledge of how to reach to people especially with the help
of platforms such as social media (Wailerdsak & Siengthai, 2016). Digital campaigns
could help the company in reaching deeper into the cities.
Corporate objective
The corporate objectives are:
 To become the best in the Thailand tea market.
 To enhance the overall profit of the firm by 10% in the first two years.
 To change the Thailand tea market forever and make it more customer centric.
Organisational design
The organisational design that this firm needs to adopt is a global product. The designed
product must be able to satisfy the needs to as many customers as possible. Since the
competition is also from the global firms with their high standard global products hence it
becomes essential that they also adopt an organisational design of being a global product.
This will also help them in adding new investors in the pool (Mangmeechai, 2016).

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Scope of expansion
Thailand tea market has earned revenue of around US$4,779.0m in 2019. The market growth
rate is expected to grow annually by 3.7% (Statista, 2019). With a high average per capita
consumption of 1.2 kg in 2019, this market has a huge scope. At the same time this company
can use it as a market to sell their products in the neighbouring countries as Thailand has
good relations with different countries. There are larger numbers of people who are emerging
out of the small villages into the cities and hence they sets to be an attractive target customers
for the company.
Financial capital requirements
As franchising is the strategy selected by the company hence most of the financial
requirements will be arranged by the purchaser firm. However the additional requirements
can be fulfilled by the company from the help of banks. It is also seen that Thailand
government is promoting any kinds of investments hence these financial requirements could
be further reduced (Chen, 2019).
Staffing policy
It is the franchisee purchaser’s responsibility to arrange the staffs and hence they need to
decide the staffing policy. The staffing policy that can be adopted by the firm is polycentric.
This is done by the company so as to ensure that the decisions that are made by the company
are totally on the basis of the environment in Thailand and people will be hired from Thailand
only (Li, 2018). At all the levels of the organisational structure this can be an effective
strategy for gaining success in the new local market.
Conclusion
In conclusion it can be said that the Bubble has gained success in different markets and hence
in the emerging markets like Thailand they can be business in an appropriate manner. The
entry mode that would be suitable for the company is franchising and the second best entry
strategy will be exporting. As franchising will allow the operations to go in the hands of the
purchasers hence they will not have to face challenges due to cultural orientation. Product
quality, Competitive pricing, Experience of working in developing markets, skilled
employees, Research and development and Supply chain are some of the strengths of the
company. Weaknesses include Investor’s shortage, Lack of technology skills, Organisational

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structure, Training and development and Lack of political support. Diversifing the brand,
Making political relationships, implementation of Hi-tech technology and Kaizan as well as
adding local culture in business are some of the mitigation strategy used by the company.
They can adopt polycentric approach to staffing policy.

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