Grants of Australia: International Business Market Entry Strategy

This case study analyzes Grants of Australia's potential entry into the Malaysian market. It begins with an introduction to the company and its focus on natural ingredient toothpaste. The study then delves into a comprehensive market analysis, examining political, economic, social, technological, legal, and environmental factors in Malaysia. This analysis includes market screening, focusing on trends and consumer preferences. The study explores Grants' competitive advantages, particularly product differentiation, and evaluates various entry modes, recommending direct exporting as the most suitable strategy. The rationale behind this choice is detailed, along with the steps necessary for implementation, including trade agreements, human resource development, supply chain analysis, and risk assessment. The conclusion emphasizes the importance of thorough market analysis and strategic entry mode selection for successful international expansion, with references to relevant academic literature.

International Business Case
Study analysis

Table of Content
• Introduction
• Overview of the case
• Market Analysis
• Rational for Choice of Country
• Competitive Advantage
• Entry Mode

• Recommended Entry Mode
• Steps to be taken for Implementing Strategy of entry mode
• Conclusion
• References
Table of Content

For engaging in any international business, concrete plans and resourcing need to be done that
enables the organization in allocating to various international processes. This can be done with the
help of market analysis and industry analysis as it facilitates them to understand the opportunities in
the market and the factors that can affect the business operation. In this presentation Grants is taken
into consideration which is a producer of toothpaste that are made up of natural ingredients. The
company is planning to expand in Malaysia and for this market analysis and competitive analysis is
done. Also the entry modes are analysed with which they can effectively enter in the market of
Malaysia.
Introduction

Grants is a medium sized producer of natural ingredients based toothpaste under the brand
name “Grants of Australia”. With the expansion of health-conscious segment in Asia and
increasing income of the people, the company aims to enter in Malaysia with a viable mode
of entry.
Overview of the case

For entering into any market it is important to consider various major factors that has
impact on the operations. It is important to gather information about various macro
environmental factors before considering the place for expansion as they have direct
influence on the success of the business. The impact of such factors on Grants are given
below:
• Political factors: In Malaysia, the Barisan National party has been ruling for 25 years
which depicts political stability. This is an opportunity for Grants to invest in Malaysia as
foreign policies will not change frequently.
Market Analysis

• Economic factors: The economic growth of Malaysia has increased significantly to
almost 7% every year which makes the country an idea place to invest. Also the income
of the consumers are increasing which offers opportunity to various retailers such as
IKEA, Tesco etc. Grants can also enter into the country to achieve the goal of expansion
in Asia.
• Social factors: The population of Malaysia is a mix of Malay, Chinese and Indians. This
mix makes their culture rich and vibrant as the people lives with harmony. Due to this it
will be easy for Grants to convince the customers as they have similarity in their attitude
and beliefs. The mangers of Grants can adopt same strategy for all which reduces the
requirement extra efforts for different customers.
Continue….

• Technological factors: In Malaysia a self contained intelligent city has been developed
that has world class infrastructure facilities. It attracts various foreign firms as they get
technological support and this is a favourable condition for Grants as well. They can
easily establish their plant their as they will be made available with all the required
resources.
• Legal factors: The law which is being followed in Malaysia is based on British law with
which people may be familiar wit. This will enable the managers of Grants to fulfil all the
legal requirements easily as they already have knowledge of the British law.
Continue….

• Environmental factors: The rapid development of Malaysia has negative impact on the
environment as due to this tremendous deforestation has taken place. Due to this the
requirement on the companies to consider the impact and to contribute to environment
has been increasing. This has to be managed as it can increase cost for Grants.
Continue….

While conducting the market analysis, Grants need to consider various other analysis such
as :
• Marketing screening: Screening of the market includes the trends, market drivers,
customers preference and forecasting. The trends which are prevailing in Malaysia
includes omni channel marketing which aims to streamline all the activities from the
touchpoint to the last activity, advertising through digital platform and mainly through
Instagram, you tube etc. All such trends has positive impact for Grants as they can cope
up with them effectively. Also the consumers are becoming health conscious which is
again favourable for them.
Continue….

• The prevailing market conditions in Malaysia are favourable for Grants to expand their
business as they provided better infrastructure and technology to the businesses. The
trade regulations and the agreements of Malaysia are quite liberal as they aims to attract
more companies to their country. The legal system of Malaysia is based upon the British
Law with which the management of Grants is aware of. So it will be a viable country for
Grants to expand for their toothpaste.
Rational for Choice of Country

A sustainable competitive advantage facilitates long term benefits against the rivals. An
organisation can take competitive advantage on the basis of cost leadership or product
differentiation.
• Cost leadership: This is the ability of the organisation to produce low cost products with
the help of production in large volume. It reduces per unit cost of the products which
helps the manufacturer in taking competitive edge.
• Product Differentiation: This strategy denotes the ability of the firm to develop a unique
product for the customers which cannot easily be copied by the rivals.
Competitive Advantage

• Various entry modes must be reviewed by an organisation when they plan for expansion in any
foreign country as with the help of such mode they can enter into the market. There can be
different type of regulations which are imposed such as local regulations that includes
regulations related to human resource and staffing, regional regulations like free trade
agreements, labelling etc. and international regulations like ISO standards, international shipping
and many more. The regulations which can be imposed on the firms includes:
• Laws across cross borders
• Legal complaints
• Agreement with national law
Entry Mode

The modes that can be used for entering into the Malaysian market can be :
• Exporting: This is the entry mode in which the products and services can be sold in any
other foreign country from the home country.
• Licensing and Franchising: Licensing and franchising is a transfer related entry
strategy. In this a company gives permission to other company to use their intellectual
rights to operate with their products for a specific period. This strategy allows frequent
expansion with low cost.
Continue….

• Partnerships: By way of strategic alliances and partnership a company can enter into
another market. This mode facilitate them to share risk and amount required for
investment with other partner but it faces an issue of integration among culture of two
different organisation.
Continue….

Recommended Entry Mode
• The most appropriate mode of entry in Malaysia for Grant will be through direct
exporting as this will provide them various advantages such as:
• With this they can test their products in Malaysia before making any investment of large
amount.
• With the strategy Grants can protect their intellectual rights and intangible assets such as
patents, trademarks etc. that they would have provided in case of licensing and franchise.
Recommended Entry Mode

Various steps that they has be to be taken by the managers of Grants for implementing
Direct exporting as their entry mode:
• A trade agreements need to be prepared by the managers of Grants which will enable
them to create mutual benefit for both the parties i.e., the one who is importing and the
Grants. Such trade agreement could be a sale agreement, distribution agreement etc.
• The human resources need to be made competent by way of various trainings so that they
can effectively understand the international market.
Steps to be taken for Implementing Strategy of
entry mode

• Internal capabilities and the resources will be analysed as on the basis of which they can
determine the lot sizes that they can provide to the other party.
• The supply chain need to be analysed effectively which will help them to ensure the
effectiveness in the availability of the materials and finished goods on time.
• Risk associated with the expansion will be identified that can be related to parent
company. Such risk can be of rapid changes in the market, do not have longevity in the
host country etc.
Continue….

• It can be concluded from above presentational that it is important for an organization to
analyze the market in which they are planning to expand so that they can effectively
formulate various strategies. Also various entry mode need to be analyzed so that success
in the new market can be ensured.
Continue….

• Andreu, R., Claver, E. and Quer, D., 2017. Foreign market entry mode choice of hotel
companies: Determining factors. International Journal of Hospitality Management. 62.
pp.111-119.
• Harrison, R., Scheela, W., Lai, P.C. and Vivekarajah, S., 2018. Beyond institutional voids
and the middle-income trap: The emerging business angel market in Malaysia. Asia
Pacific Journal of Management. 35(4). pp.965-991.
References

Thank you