Business Expansion in Global Context: Investing in New Zealand Market

This report examines strategies for a Chinese company's expansion into the international market, specifically focusing on New Zealand. It explores various entry modes, including exporting, strategic alliances, and joint ventures, while considering the advantages of investing in New Zealand based on its competitive attributes. The report analyzes the selection of subsidiary locations, emphasizing factors such as business objectives, access to labor, and political stability. It also discusses the importance of concentrated and decentralized strategies. Furthermore, it outlines the HR approach for acquiring a workforce in the international market, considering skills and cultural understanding. The report concludes by emphasizing the importance of adapting business strategies to the global context, and making informed decisions about market entry and subsidiary locations.

Running head: BUSINESS IN GLOBAL CONTEXT
Investing in New Zealand
Student’s Name:
Institution:

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Table of Contents
1.0 Introduction................................................................................................................................3
2.0 Location of Business - China.....................................................................................................3
3.0 Product/Service..........................................................................................................................4
4.0 Suitable Strategy........................................................................................................................4
4.1 Exporting Strategy.................................................................................................................4
5.0 Entry Modes to International Markets.......................................................................................5
5.1 Strategic Alliances (SA).........................................................................................................5
5.2 Joint Ventures (JV).................................................................................................................6
6.0 Why Invest In New Zealand......................................................................................................6
7.0 Concentrated and Decentralized Strategy..................................................................................7
8.0 Factor to Consider in Choosing a Subsidiary Location.............................................................8
9.0 HR Approach to Getting Workforce for International Market..................................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

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1.0 Introduction
The globalization characterized by changing trend in business has resulted in the high
competition which has forced organizations to venture into international markets. The paper is
going to examine MNC’s strategies for expansion into the international market.
2.0 Location of Business - China
The organization is located in China and seeks to establish and penetrate into the
emerging markets. New Zealand has been identified as an emerging market to enter. The reasons
for the company deciding to venture into the New Zealand market is because it is established that
companies that do business globally expand the market for local products, realize location
economies by taking individual value product to location in the planet where they are deemed to
perform very well and that is why New Zealand has been identified. Additionally, there is
reduction in costs of value-creation because a large market gets served from a central place.
Also, there is use of valuable skills in the foreign market which will lead to high returns.
Secondly, company is seeking for market. The market in China is still very large given
that there is a huge population; however, the problem is that there is high competition in
electronics-producing companies. Many companies do produce and sell these products to the
locals as well as to the international market. As a result of these, the organization will venture
into the New Zealand market in order to increase its market share and expand on sales revenue
(Tan, 2016).
Moreover, there is the establishment will endeavor to manufacture its products and sell
them to its subsidiaries in New Zealand. This is because the cost of producing these products in
China is less costly owing to cheap available skilled labor (Li, Easterby-Smith & Hong, 2019).

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In addition, investing in New Zealand is to develop strategic assets like technology,
distribution, and networking. Therefore, in achieving this, the organization is going to establish a
partnership with similar and related organizations in New Zealand (Tan, 2016).
3.0 Product/Service
The products are going to be technology related electronic products specifically
developed from China. Since there is advancement in technological products, the company will
specialize in electronics. This is driven by the fact that New Zealand is a moderate class in terms
of living standards; there is a possibility of living standards going up. Additionally, this level of
people is people with moderately affordable products.
4.0 Suitable Strategy
4.1 Exporting Strategy
The strategy is adopted because it creates an opportunity for the organization to increase
sales as well as profits. When sales are carried out for a long term period, and when the cost of
export has been taken care of, there is are increases profits by a great margin and the
organization benefits to a great extent. Additionally, companies gain competitive advantage in
the local market which will assist the acquire strategies of venturing into the international
market. The organization will be able to gain an international market share.
There is diversification which is where the company enters a new market and struggle to
grow with the use of new products, and the products can be diversified through horizontal,
distinguished, concentric or lateral. The company will use concentric diversification where new
products display synergies with an existing product. The reason is that there is a high potential
for attracting new clients (Székely, 2015).

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The strategy allows organizations to lower per unit costs where there is expansion of
production to meet the demand in the market. It is going to result in reduction of unit cost of the
products. An organization is able to sell its products in global market even when the season for
those products at home is down therefore compensating on seasonal demands. Also, when a
company exports, there is increased expansion where additional personnel will be required.
Since there is high competition in China of electronics products, exporting will allow the
organization to sell excess product which will reduce product disposal or selling at discounted
rates. Moreover, there is gaining of knowledge and experience because a company will gain
insight, new ideas and technology as well as getting g acquainted with the foreign competitors.
Also, the product once it has reached maturity stage, it can be re-introduced once again in a new
market (Helena, & Sylvie, 2016).
5.0 Entry Modes to International Markets
5.1 Strategic Alliances (SA)
This is a treaty entered between companies to undertake business together so that they go
beyond the organization to organization dealings so that they can attain objectives that would
have been impossible by an individual company (Moghaddam, Bosse & Provance, 2016). This is
a strategy for entering the foreign market where an organization establishes a business
relationship with companies in the emerging market. The reason is for sharing common
resources for the good of penetrating into the business. These alliances seek to share
manufacturing, undertake research and development, distribution networks, and marketing
strategies (Zoogah, Noe & Shenkar, 2015). The benefit of this strategy is that there is increased
competitive advantage with the utilization of the other partner’s resources because there is a
complementary application of resources. Additionally, this strategy reduces manufacturing costs

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and permits the diffusion of new technologies in a quick manner. The barriers associated with
legal and trade matters are lessened to a great deal and therefore accelerating growth
(Moghaddam, Bosse & Provance, 2016).
5.2 Joint Ventures (JV)
This is a strategy in which two organizations come together with the aim of penetrating
into the new market but with retention of each company’s identities. The companies coming
together endeavor to share investments where each partner contribute a certain amount of capital
for the project based on agreed terms. In addition, there are shared expenditures and expertise.
This strategy allows the organization to venture and penetrate into new markets in a quick
manner (Petrakis, & Skartados, 2017). In this association, there is an increased stream of
revenues because the sales are going to be enhanced due to new market penetration. This permits
a small business to expand very quickly by taking advantage of the avenue provided by a well-
established company (Oswald, Sherratt, & Smith, 2018). Moreover, there is again in intellectual
property. An organization that is starting to get into a venture with firms those are rich in
technology so that they gain from the technology as they progress and grow. A firm might be
having strength in one area and weakness in the other section, so these two will maximize on the
strengths of each other to counteract the weaknesses (Petrakis, & Skartados, 2017).
6.0 Why Invest In New Zealand
In relation to the 12 pillars of competitiveness (World Forum), it is established that New
Zealand has the following attributes to attract foreign investment. The first one is stable and
secure and is among the most of the top twenty stable countries in the world. The country for
over many years has kept a low inflation rate. The country has friendly financial policies, no
controls on exchange and funds repatriation (Evison, 2016).

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Additionally is the strategic location which is central and well-connected globally. South
Pacific is a good base for exporting to the global market. Also, the country is well connected to
major nations such as Europe, US, and Asia. Besides trade agreements, the country has well
developed IT infrastructure with high-speed internet and well-constructed transport infrastructure
(Evison, 2016).
The living standards of the people are moderate and affordable but of high quality. This is
an average wage nation when compared to Australia (Evison, 2016). The country is sustainably
secure owing to the fact that they embrace sustainability programs in many of their operations
both individually and institution wise. The country has good progress to business as well as in
guarding the environment (Evison, 2016). The people of New Zealand are well-educated and
skilled. As a result, there is skilled labor which can be used when venturing into this market
(Evison, 2016).
7.0 Concentrated and Decentralized Strategy
The organization is going to use both concentrated and decentralized international
strategies. The concentrated strategy is adopted because the organization is going to use a
concentrated strategy for its international venture (Morschett, Schramm-Klein & Zentes, 2015).
The reason is that the company is expanding only on a single product to a few markets.
Additionally, the product is going to be appealing to only to a homogeneous group (Buckley &
Ghauri, 2015). The decentralized strategy will be employed so as to delegate top management
roles to the middle managers in different subsidiaries for ease of management and control, and
also to increase on product range to cover different segments (Mohiuddin, 2018).

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8.0 Factor to Consider in Choosing a Subsidiary Location
There are a number of factors that can be considered when choosing a location for a
subsidiary. The most essential factors for an international subsidiary are given.
Business Objectives: The task the entity purposed to offer determines the location. A banking
institution cannot be located in a remote area with no population whereas a farming entity cannot
be located in a city where there are no farmers (Cifranič, 2016).
Competitors and suppliers: The essence of business if to venture into unexploited territories. A
location with no much competition is suitable for the flourishing of the business. Also, the
location must be accessible to the suppliers so that they do not get stranded or the suppliers can
easily be established in that location (Alcácer, Cantwell & Piscitello, 2016).
Access to Labor: A location with available and cheap labor is suitable for the proper running of
the business. There are locations where labor cost is expensive or labor might not be available
and thus causing the company to hire from afar place which is costly in the long run (Alcácer,
Cantwell & Piscitello, 2016).
Pull or Push of Mother Corporation: This is dictated by the organization. When a company
wants a business closer to the parent company for easy supervision and control then a location
not far from the parent company is necessary. When the company wants to expand and acquire
new market segments, then a distant location is suitable (Cifranič, 2016).
Rule and regulations: The location must be one without complicated rules and procedures that
hinders the operation of the business. The regulations must foster and support business (Alcácer,
Cantwell & Piscitello, 2016).

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Political, Financial and Societal Stability: This entails the location’s status in terms of politics,
economy, and social setting. A good place is where all these factors are stable so that there are
peaceful operations of the business (Cifranič, 2016).
Cultural Practices: The best location is where there are not tight cultural practices and norms
that hinder the business. A business will not be able to change this culture and hence become a
problem. The best place is where there is modernization and people have embraced the western
culture (Alcácer, Cantwell & Piscitello, 2016).
Infrastructural development: A business thrives well is an area where there is accessibility in
terms of transportation and communication. The best place for a subsidiary is where there is
good infrastructural network (Cifranič, 2016).
9.0 HR Approach to Getting Workforce for International Market
In venturing into the international market, the HR must understand the country, the skills
available and the culture. For the purpose of commonality in recruitment, HR must take into
considerations the following:
Skills: due to internationalization, the present market has been rendered dynamic. HR has to
recruit employees with a skill that suit the work based on the business objective. The level of
education and type of courses for every skill is essential, and this informs more about the hard
skills and soft skills (Jeske & Axtell, 2016).
Cross-cultural setting: According to Hofstede dimensions, different nations have different
cultural settings and hence different ways of leading and doing work. The HR needs to consider
this in order to get a dynamic varied workforce gets that will blend well in the working
environment that fosters respect, diplomacy, and sensitivity (Thite, 2014).

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Outstanding networking capabilities: The present market is almost being dominated by the
internet and social media and networking are becoming part of doing work. HR has to ensure the
employees coming on board have networking abilities in order to facilitate easy marketing for
the company (Jeske & Axtell, 2016).
Collaboration: This is an aspect that ensures that employees in an organization are able to
collaborate and work together as a team. Teamwork fosters the organization’s success (Thite,
2014).
Interpersonal influence: This is the ability of an individual to influence and course a positive
impact on the company and this is created by ensuring that there is good professionalism erected
on respect. Getting people with this attribute is a benefit to the organization (Jeske & Axtell,
2016).
Adaptive thinking: The present fast-changing environment requires people who can think and
adapt very fast to the changing trends in the business environment. This requires HR to employ
individuals with humility, curiosity and have control (Thite, 2014).
Emotional intelligence and resilience: The HR has to look for people with excellent intelligence
and resilient (Jeske & Axtell, 2016).
Conclusion
The international market presents immense opportunities for growth. Organizations need
only to identify markets to venture into and put in strategies that will facilitate entering into these
emerging markets.

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