Global Business Management Report: Relstar Lubricants in Brunei Market

This report examines Relstar Lubricants' international expansion strategy, focusing on the Brunei market. It begins with an introduction to Relstar Lubricants, highlighting their product portfolio and expansion goals. The report then analyzes the external environment of Brunei using a PESTEL framework, evaluating political, economic, social, technological, environmental, and legal factors. The rationale for choosing Brunei as a target market is presented, emphasizing its stable political climate, skilled labor force, and favorable economic conditions. The report identifies foreign direct investment (FDI) as the most suitable market entry strategy and provides a competitive analysis using Porter's Five Forces. The conclusion summarizes the findings and recommends rigorous market strategies to address potential competition. The report includes references to relevant academic sources.

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Introduction
Relstar Lubricants offers premium quality and next generation engine oil. It offers wide
variety of high performance products across 13 segments starting from automotive to industrial
lubricant oils. The company caters to the needs and requirements of their consumers with their
advance formulated lubricant oil. The company has been planning to expand its business in the
global market. The significance of business expansion is to capture the economies of scale and
the geographic scope. This enables the business organization to increase their exposure in the
global market and boost the reputation of the business organizations. This positively influences
the profitability of the business organizations. The report determines the international expansion
plan for Relstar Lubricants. It determines the rationale for the chosen country Brunei. It identifies
the market entry strategy and the rationale. Lastly, it provides recommendations and concludes
the report.
Discussion and analysis
Business plan for market expansion
Relstar Lubricants offers wide variety of product portfolio of premium quality at
affordable prices. The business organization has undertaken ambitious target to expand its
operations and business activity overseas in the future years. The business organization has been
planning to consider expanding its operations to Brunei, exploring the market opportunities for
lubricant business (Verbeke, 2013). The company is a largest lubricant player in the domestic
country. Relstar Lubricants further plans to expand its operations and increase its presence in the
global market. Business expansion has been taken into consideration to increase the reputation of

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the business organizations in the international market. It aims to increase overall revenue and
profitability of the business organizations.
External environment analysis of Brunei – PESTEL analysis
Political environment – The political environment is highly stable. The political stability of the
country is led by benevolent monarchy.
Economic environment – The country has ready availability of industrial sites. The advanced
infrastructure of the country is highly supportive for business expansion (Verbeke, 2013).
Social factors – There are well educated and skilled manpower in the country. The adult literacy
rate of the country is 94% (Verbeke, 2013). Majority of the population in the country is high
education which increases valuable resources.
Technological factors – The country is technological advanced which makes it favorable for
business expansion.
Environmental factors – The country is known for its extraordinary biodiversity. There is rich
bio diversity in the country. There is an easy access to hydrocarbon resources.
Legal factors – Brunei has most liberal tax regions. There is tax relief on personal income,
export, payroll, or manufacturing. There is less tax controls in the region (Oh & Contractor,
2014).
Rationale for entering Brunei as target country
Brunei has been considered for business expansion. It is an oil rich sultanate on the
northern coast of Borneo. As per research and studies, Brunei has well educated and skilled
labour. They have excellent infrastructure and diversifying economy and foreign investment (Oh

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& Contractor, 2014). The political situation of the country is stable as compared to other
countries. This situation welcomes the potential investors. The GDP rate of the country is highest
among other countries. There is high level of disposable income among the people in the country
(Lasserre, 2017). Most importantly, natural gas production and crude oil accounts to be 65% of
the country’s GDP rate. The government of Brunei has been taking initiates and measures to
diversify the economy as stated by Bîrsan, Shuleski & Cristea, (2016). As per research, the trade
in Brunei has increased in the past years followed by regional economic integration in the
ASEAN economic community. Considering the favorable business situation in the country, it can
be concluded that Relstar Lubricants can undertake the opportunities prevailing in the country
(Lasserre, 2017). Considering the unique business culture in the country, expansion in the target
country can be done at ease. Moreover, the country is considered as the world’s most stable
macro economy as recognized by World Economic Forum (Holtbrügge & Baron, 2013). This
position of the business organization is considered suitable for conducting business and investing
in the country. The country has a high quality of life with high level of political stability
(Lasserre, 2017). It has been identified, that the oil and gas industry of the country is the
backbone of Brunei’s economy. Therefore, Brunei is considered to be a perfect location for
investing. There are various free trade areas in the country. The country is actively engaged in
Free Trade Areas (FTAs) through plurilateral and bilateral basis (Bîrsan, Shuleski & Cristea,
2016). Most importantly, the country has least number of taxes in the country. There is no
manufacturing tax. There is ready availability of industrial sites in the country.
Market entry strategy and rationale
Strategy for market entry- Foreign Direct investment

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Foreign direct investment (FDI) involves establishing foreign business operations in the target
country. It involves acquiring foreign direct assets in the target country. Brunei is the target
country for expanding business operations. As per research and analysis, it has been identified
that FDI rate has increased by 635.30 BND Million. Brunei attracts FDI to strengthen the overall
economy of the country (weforum.org, 2020). As per the legislative of the country, the government
will be increasing its investments in the country. This situation facilitates and provides benefits
to executing its business operations. There is abundant availability of human resources who are
employable and competent. The government spending are focused and geared to strengthen to
GDP of the country especially the oil and gas sector. This lures foreign direct investment in the
country (weforum.org, 2020). Therefore, it can be said that foreign direct investment is most
suitable strategy for expanding the business activities. The government facilitates foreign
business in Brunei as this is the driving force for the development of the country. Moreover,
there are free trade agreements with the international partners which increase the opportunity for
Relstar lubricants.
Foreign Direct investment (USD)

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Source: (weforum.org, 2020)
Competitive analysis – Five force analysis
Porters five force analysis helps to understand the industrial forces which affect the
functioning and activities of the business organizations. The threats of new entrants, the threat of
substitute products, bargaining power of the consumers, bargaining power of the suppliers and
rivalry among the existing firms of the business organizations can impact the operations and
performance of the business organizations (Dobbs, 2014).
Threat of new entrants: The barrier to entry in the Brunei market is low. The threat of new
entrants in the market is high. It is easier for new firms to entry in market considering the
favorable situations prevailing in the country (Dälken, 2014). The laws and regulations of the
country are supportive to the business activities.
Threat of substitute products: The threat of substitute products in the target country is high.
There are many alternatives in the country for the customers to choose from. The quality and
price of the substitute products are high, which increases the level of competition in the market.
Bargaining power of the buyers: the bargaining power of the buyers affects the pricing of the
products and services. Relstar Lubricants needs to take measures to reduce the bargaining power
of the consumers by offering them discounts and offers (Dobrivojevic, 2013). The company
needs to take initiates to gain loyal customers. Since there are many alternatives in the country,
the consumer bargaining power is high.
Bargaining power of suppliers: The bargaining power of the suppliers has the ability to affect
the price for the supplies. The supplier’s products can create high switching costs. The suppliers
are large in the market, therefore, the power of the suppliers are low to moderate. This situation
is favorable for the business organizations (Amrollahi & Akhgar, 2013).

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Intensity of rivalry among the competitors: There is intense competition preset in the country.
The rivalry is high among the competitors. Relstar Lubricants might face stiff competition in the
market. The product offered by the company is similar to the competitors’ products.
Conclusion and recommendations
Therefore, from the above analysis it can be concluded therefore, from the above
analysis, it can be concluded that Relstar Lubricants offers wide variety of premium products at
affordable pricing. The country has been planning to expand its operations to Brunei. As per
research and analysis, it can be concluded that Brunei is a favorable country for business
expansion considering its stable political environment, the legal systems of the country and the
taxation policies. The report has conducted external environment analysis to determine the
factors suitable or unsuitable for business expansion. Further, it has been identified that foreign
direct investment is most suitable as a market expansion strategy considering the low risks and
other benefits. However, it has been identified that Relstar Lubricants might face stiff
competition in the market as there are low barriers to entry and abundant availability of raw
materials and skilled labour. Therefore, it is recommended that Relstar Lubricants must
incorporate rigorous market strategies and promotions to influence the customers towards
purchasing their products instead of the competitor’s products.

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References
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forces. International Journal of Computer Theory and Engineering, 5(1), 162.
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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).
Dälken, F. (2014). Are Porter’s five competitive forces still applicable? A critical examination
concerning the relevance for today’s business (Bachelor's thesis, University of Twente).
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Dobbs, M. E. (2014). Guidelines for applying Porter's five forces framework: a set of industry
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Oh, C. H., & Contractor, F. (2014). A regional perspective on multinational expansion strategies:
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Verbeke, A. (2013). International business strategy. Cambridge University Press.