Relstar Lubricants: Market Entry Strategy for Brunei Expansion Report

This report examines Relstar Lubricants' plan to expand its engine oil business into Brunei. It begins with an introduction highlighting the company's domestic success and international aspirations. The report then conducts a PESTEL analysis of Brunei, considering its political stability, economic advancement, skilled labor force, technological factors, environmental aspects, and liberal legal framework. The rationale for choosing Brunei is explained, focusing on its oil-rich status, skilled workforce, and favorable business environment. The market entry strategy focuses on Foreign Direct Investment (FDI), with a justification based on Brunei's attractiveness for FDI. A competitive analysis using Porter's Five Forces is presented, assessing the threats of new entrants, substitute products, bargaining power of buyers and suppliers, and intensity of rivalry. The report concludes by recommending FDI as a suitable approach for Relstar Lubricants to expand its business into Brunei, emphasizing the country's favorable business environment and legal framework. References supporting the analysis are also included.

GLOBAL BUSINESS
EXPANSION
STUDENT’S NAME
UNIVERSITY NAME

RELSTAR
LUBRICANTS Relstar Lubricants offers high
quality engine oil.
The product ranges from
automotive to industrial
lubricant oils.
The products offered by the
company are advance
formulated.
The company has excelled in
the domestic market and plans
to expand its business to Brunei.
It has undertaken target to
expand its business overseas.
INTRODUCTION

External business environment –
PESTEL Analysis
Political environment – Brunei has
a stable political environment. It is
led by benevolent monarchy
(Amrollahi & Akhgar, 2013).
Economic environment – The
country is economically advanced
with advanced infrastructure.
Social factors: The people of the
country are highly educated with
abundant availability of skilled
labour.

Cont…
Technological factors: The advanced
technological aspects of the country
is favorable for business expansion.
 Environment factors: As per
research, the country has
extraordinary biodiversity with each
access to hydrocarbon resources (Ang,
Benischke & Doh, 2015).
 Legal factors : The country is highly
liberal in terms of taxation policies.

Rationale for the chosen country
It is oil rich sultanate which makes it
favorable for business expansion.
The country has abundant availability of
skilled and well educated labour.
However, the labour in the country is
expensive.
 The oil and gas industry contributes
majorly to the GDP of the country (Bîrsan,
Shuleski & Cristea, 2016).

Cont…
There are many free trade areas in the
country.
There is high level of tax relief in the
country.
The country has ready availability of
industrial sites in the country.
There are many opportunities in the
country which makes it favorable for
business expansion.

Market entry strategy
Foreign Direct Investment
Foreign Direct Investment (FDI) involves
investments made in the target country.
It involves making an investment in other foreign
countries to utilize the prevailing opportunities in the
country.
FDI is done in open economy with skilled workforce.
The company can have direct control over the
business activities.

Rationale for market entry
Brunei attracts FDI to boost and
strengthen the economy of the
country.
The government plans to
increase its expenditure.
This situation facilitates business
expansion to Brunei.
The laws and regulations favors
foreign direct investment.

Competitive analysis – Five force analysis
Threat of new entrants – The threat of new
entrants is high in the market. The laws and
governmental politics are supportive and
favorable for business expansion.
Threat of substitute products: The threat of
substitute products is high in the market.
This increases the level of competition in
the market.

Cont…
Bargaining power of the buyers: the
bargaining power of the customers are high
due to cheap availability of alternatives.
 Bargaining power of suppliers: The power
of the suppliers are low to moderate.
Intensity of rivalry among existing players:
There is intense level of competition in the
market (Dobrivojevic, 2013).

Conclusion and recommendation
Brunei has favorable business situations for
business expansion.
It has a stable political environment
The taxation politics and the legal
framework of the country is suitable for
business expansion.
Foreign Direct investment will be taken
into consideration to expanding business.

References
Amrollahi, A., & Akhgar, B. (2013). Analyzing open source business with
Porter's five forces. International Journal of Computer Theory and
Engineering, 5(1), 162.
Ang, S. H., Benischke, M. H., & Doh, J. P. (2015). The interactions of
institutions on foreign market entry mode. Strategic Management
Journal, 36(10), 1536-1553.
Bîrsan, A., Shuleski, D., & Cristea, C. V. (2016). Practical Approach of the
PEST Analysis from the Perspective of the Territorial Intelligence. Ovidius
University Annals, Series Economic Sciences, 16(2).
Dobbs, M. E. (2014). Guidelines for applying Porter's five forces framework: a
set of industry analysis templates. Competitiveness Review.
Dobrivojevic, G. (2013). Analysis of the competitive environment of tourist
destinations aiming at attracting FDI by applying Porter’s five forces
model. British Journal of Economics, Management & Trade, 3(4), 359-371.
Holtbrügge, D., & Baron, A. (2013). Market entry strategies in emerging
markets: An institutional study in the BRIC countries. Thunderbird International
Business Review, 55(3), 237-252.