International Business Strategy Report for Annex Products in India

This report provides a comprehensive international business strategy for Annex Products, an innovative Australian company, aiming to enter the Indian market. It begins with an executive summary and table of contents, followed by an introduction to Annex Products and their existing business model, which includes exporting their iPhone accessories. The report then delves into relevant international business theories like PESTLE analysis, Ansoff matrix, and Porter's Five Forces, alongside economic theories such as absolute advantage and country similarity. The chosen market, India, is justified by its large population and growing iPhone user base, and the quad lock iPhone mounting system is selected as the product. The report explores market entry strategies, including direct exporting and licensing, evaluating their advantages and disadvantages. The report concludes by recommending an effective coordination of resources and a strategic approach for successful foreign market operations, enhancing future global business prospects.

Running head: INTERNATIONAL BUSINESS STRATEGY
International business strategy
Name of the student
Name of the university
Author note

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Executive summary
The aim of this report is to discuss about the international business strategy of Annex products in
entering in the Indian market. In this report, the theories to be used prior to the investment in
India are being identified along with their advantages. The existing business model of Annex
products is discussed and evaluated in regards to the international operation. The new business
model s also recommended in this report including the market entry strategy and required
resources for it. This report concluded that effective coordination among the resources will help
them to have proper foreign market operations and it will further help in enhancing the future
global business.

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Table of Contents
1.0 Introduction................................................................................................................................3
2.0 Background................................................................................................................................3
3.0 Existing business model............................................................................................................4
4.0 Theories and concepts in international business........................................................................4
5.0 International expansion context.................................................................................................5
6.0 Country choice and product choice...........................................................................................7
7.0 Market entry strategies..............................................................................................................7
8.0 International business strategy choice.......................................................................................9
9.0 Strategic implications..............................................................................................................11
10.0 Postscript................................................................................................................................12
Bibliography..................................................................................................................................14

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1.0 Introduction
Annex products are one of the leading innovative small business organizations in
Australia. Their innovative products including the mounting system for iphone is much popular
and is available in more than 100 countries. This report will discuss about the international
business strategy for entering in the Indian market. Discussion of international business strategy
will include the economic drivers, market entry strategy and recommendation of a new business
model.
2.0 Background
In the recent time, it is becoming more important for the business organizations to
become innovative and align their products with the daily lifestyle of the customers. Annex
products are one of such innovative organizations that are effectively offering products in line of
the current requirements of the customers. It is founded in 2012 by Chris Peters and Rob Ward.
The major two products of them are iphone case that also acts as bottle opener and iphone
mounting system that mounts the iphone in the time of cycling, running and driving
(annexproducts.com, 2018). Both these products are much important in the current daily life of
the urban customers. Currently, they are catering to the customers in the Tier I cities where the
trend of cycling and running is evident along with large number of iphone users. The major
competencies for Annex products are alternate uses for their products such as the iphone
mounting system that can be used to mount the devices in different situations. Thus, the
customer convenience is given the major focus. In addition, another major competency for them
is meeting the current lifestyle of customers that helps them to cater to the customer needs
effectively.

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3.0 Existing business model
The business model of Annex products first started on the crowd sourcing platform
Kickstarter. This was mainly due to the reason that Annex products are a startup and was not
having the access to the fund needed for operating in the market (Kuppuswamy & Bayus, 2018).
However, with the following success of their both products, they have gained financial
sustainability. Currently, they are operating in small scales in Australia and already following the
export strategy to export their products to different regions around the world. As of now, they are
manufacturing in Australia and selling their products in premium to the urban customers. This
business model is successful for Annex products due to the reason that it helped them in gaining
more funds along with the branding of premium product (Casadesus-Masanell & Zhu, 2013).
However, in the case of entering in the foreign markets, Annex products should change
their existing business model to some extent. One of the major changes will be access to finance
due to the reason that crowd sourcing strategy will not be applicable in doing global business and
it is important for Annex products to have more access to other sources of funding (Drahokoupil,
2014). It is also important for them to have adaptive policies of promotion and marketing in their
global business. Annex products also cannot operate in the global with their current strength of
human resources; rather they have to go for geocentric staffing.
4.0 Theories and concepts in international business
The major theories that should be considered in advising the prospective international
business are PESTLE theories, Ansoff matrix, product life cycle, comparative advantage and
porter five forces. All these theories will help in determining the potentiality of the target market
prior to entry. PESTLE analysis will help in determining the external business factors that will be

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faced by Annex products in entering in a foreign country. These factors will be both negative and
positive. Thus it will help the organization to design their strategies accordingly before entering
in the foreign markets (Ho, 2014). Furthermore, ansoff matrix will help Annex products to
determine the business expansion strategy that will be applicable and effective in entering in the
foreign country. This is important due to the reason that Annex products should first decide if
they are willing to enter the foreign market with their existing products or with new products or
if they are willing to further penetrate and increase their market share in the existing market
(Hussain et al., 2013).
Product life cycle theory will help to identify the stages where the products of Annex
products are currently standing. In accordance to that, they can design their international
business strategy (Bakker et al., 2014). For instance, if the products of Annex products are in the
maturity stage in the Australian market, then offering the same products in a new country may
help them to start from the growth stage. Comparative advantage refers to the advantages that
may be gained by Annex products from their host country. These factors should also be
determined in order to have the understanding about the competitive advantages to be gained
from entering in particular country. Porter five forces will help to determine the industry
competitiveness in the country where Annex products are going to enter. This is also important
in identifying the challenges that Annex products are going to face in the host market (E. Dobbs,
2014).
5.0 International expansion context
 One of the major economic theories is the absolute advantage theory by Adam Smith.
This theory states that in the international business, some of the countries are having

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absolute advantage of others in producing particular goods. This is mainly due to the
reason that some countries are having more access to strategic resources over others
(Noussair, Plott & Riezman, 2013). Thus, it is important for Annex products to select a
foreign country in order to gain absolute advantage in producing their products.
 Another economic theory is the country similarity theory by Steffan Linder. This states
that countries with having similar market trend and pattern often pose more market
opportunities for the organizations (Zhuang, Wu & Wen, 2013). Thus, in order to gain
further market share and revenue from their similar products, Annex products should
target a potential country where they will have markets for their existing products.
 Another major economic theory is the global strategic rivalry theory. According to this
theory, it is important for the business organizations to enter in the global market for
gaining competitive advantages (Cui, Meyer & Hu, 2014). According to this theory, the
more countries can be covered, the more will be the probability of gaining competitive
advantages by means of economies of scale and more access to finance. Thus, Annex
products should enter in the foreign markets to gain more brand value, identity and
reduced cost of production, which cannot be done in doing business only in the
Australian market.
 Another major economic theory is the Porter’s national competitive advantage theory.
This theory refers to the competitiveness of the home market that further encourages the
firms in entering in the foreign market (Zhang & London, 2013). For instance, if the
competitiveness in the local market is increasing along with decrease in the demand in
the market, then it is more obvious for the organizations to look out for new markets.

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Thus, the limited market opportunities for Annex products in doing business within the
national boundary of Australia is further contributing them in entering in a new market.
6.0 Country choice and product choice
The chosen country is India due to the reason that India is the second largest country in
the world in terms of population. Thus the market opportunities for Annex products will be
more. In addition, it is reported that by 2018, India is set to cross 10 millions of iphone users in
the country (economictimes.indiatimes.com, 2018). Thus the market potentiality of the iphone
specific products of Annex products in the Indian market will be more. Another major reason of
selecting India is their favorable business environment with having stable political and
economical factors. In the recent time, government of India has initiated the “Make in India”
initiative, which will further offer benefits and incentives to the foreign companies in
manufacturing in India (Pathak, Swami & Nigam, 2016). The chosen product will be the quad
lock iphone mounting system. This is due to the reason that with the favorable economic growth
of India, urbanization is the increasing at a rapid pace. This urban population is having the need
for mounting system for their iphone during cycling and running. Number of alternate uses of
this product will further help Annex products to have more market potentiality in doing business
in India.
7.0 Market entry strategies
One of the major market entry strategies available for Annex products is direct exporting.
This strategy refers to the process of exporting the products to the target country on the basis of
the demand. In this case, the manufacturing process will be in Australia and the final products
should be transported. One of the major advantages that Annex products will gain from direct

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exporting strategy is having less responsibility (Gubik & Karajz, 2014). In the case of the direct
exporting, Annex products will have less responsibility and risks in operating in the global
market. They do not need to invest huge in this case and can cater to the target market according
to the demand. However, on the other hand, it should also be noted that initiation of the direct
exporting strategy will also have some disadvantages for Annex products. One of the major
disadvantages will be increase in cost (Ito, 2013). Exporting the products will involve trade
tariffs that will further increase the cost. In the market like India, price sensitivity is a major
determining factor and increase in the price will reduce the market potentiality. Furthermore,
with direct exporting strategy, Annex products will not be able to cater the target country entirely
(Almodovar, Saiz-Briones & Silverman, 2014). This is due to the reason that exporting will be
done only one the basis of the demand. It is also not a viable option to export a single iphone
mounting system.
Another major market entry strategy available for Annex products in the Indian market is
licensing. This strategy involves granting license to a domestic firm in the host country to
produce the items. Instead the licensee firm will pay royalty to Annex products and will have the
rights to manufacture and market the products in the Indian market (Laufs & Schwens, 2014).
One of the major advantages to be gained by Annex products from this strategy is having
physical presence in the host market without having to take major risk and requirement
investments in the country. On the other hand, Annex products will also gain the advantage of
changing their product strategy in accordance to the local market trend and requirement
(Eriksson et al., 2015). However, this strategy will also have some major disadvantages for
Annex products. They will have to transfer their technology and other competitiveness to the
licensee in this case. Thus, the risk of publicizing the core competitiveness is high in this case. In

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addition, Annex products will not have the direct control over the operation in the host country.
This may cause challenges in maintaining the same product quality and standard along with
having the same business approaches.
The last market entry strategy available for Annex products is the direct investments.
This strategy involves investing in setting up facilities in the host country and driving the
business by own. In this case, the operation in the host country will be directly controlled by
Annex products (Blonigen & Piger, 2014). The major advantages that will be gained by directly
investing in the Indian market is controlling the host country operation by own and thus the
standards can be maintained. With investing directly in the Indian market, Annex products will
be able to gain the advantages under the ‘make in India” initiative. In addition, this strategy will
also help Annex products to control their product strategy and change the approach in
accordance to the trend in the local market (Holmes et al., 2013). The products can also be
offered in more affordable and competitive costs if they are manufactured in the country. On the
other hand, Annex products will face the issue of increased risks due to the fact that they have to
invest heavily in the country for their facilities. In addition, directly investing in the country will
cause Annex products to face challenges in doing business in India.
8.0 International business strategy choice
The recommended market entry mode for Annex products in the Indian market is direct
investing. This is due to the reason that iphone mounting systems in the Indian market are
available but the industry is mainly disorganized and there are no known brands available. Thus,
directly entering in this market will help Annex products to gain competitive advantage by their
branding (Urbancova, 2013). In operating in the Indian market, price factor is important to be

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considered. Thus, offering affordable and cost effective products will be possible only if the
products are locally manufactured. In the future course of business, if the market trend and
requirement in the Indian context get changed, then also it will be easier for Annex products to
change their product strategy. This is due to the reason that they are having their operating
facilities in India and will initiate the change process in less time (Meihami & Meihami, 2014).
The business model of Annex products should be designed in such a way that it will be able to
offer diverse products to the customers in future. India is one of the largest markets for mobile
devices with having the presence of huge number of brands. Thus, having the manufacturing
facility in the Indian market will provide Annex products the flexibility to come up with the
mounting systems for other models also. This will ensure that the future business potentiality of
Annex products will be secured in the Indian market.
Annex products can also make their Indian operation as global export hub due to the
reason that average cost of production in India is less to that in Australia. Therefore, with having
the manufacturing facility in India, Annex products will be able to manufacture here and export
to different countries. This will enhance the profitability of Annex products. The major objective
of the business model to be followed in India is to increase the diversity of the product portfolio
along with maintaining the price (Schultz, Salomo & Talke, 2013). Currently, the business model
of Annex products is applicable and effective for the domestic market of Australia, but it cannot
be to cater the global market. On the other hand, the business model to be followed in the Indian
market will be effective in initiating global business also. However, it should also be noted that
business operation in India will only get succeed if the diversity of the Indian social environment
can be maintained. India is having huge diversity in terms of socio-cultural factors along with
having different requirement and expectations (McNally, Durmusoglu & Calantone, 2013). Thus,

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the business operation of in India should have more diverse product portfolio compared to the
operation in Australian. Thus, offering diverse products will help Annex products to cater to not
only the Indian market but also catering the global demand.
9.0 Strategic implications
There are number of resources required for implementing the business model by Annex
products. One of the major resources required is human resources. The existing human resources
are not enough to drive the business in the host country (Gupta, 2013). Thus, Annex products
should initiate recruitment process to have news set of employees in the Indian business.
However, it is recommended that they should have geocentric approach of the staffing due to the
reason that this strategy will enable to have employees from both the home and host countries
(Tiwari, 2013). Annex products is having the requirement of employees from the both the
countries due to the reason that home country employees will able to maintain the existing
organizational approach and host country employees will be able to determine the local trends.
However, in this case, the major risk for Annex products will be the cultural miscommunication
between the employees from two countries. This may affect the productivity and efficiency of
the Indian operation.
Another important resource is marketing capability. In the Australian market, Annex
products follows intensive marketing strategy focusing more on generating positive word of
mouth. However, in the Indian market, marketing strategy should be made more extensive in
order to have maximum reach in the market (Nobre & Silva, 2014). Hence, Annex products are
having the need of marketing expertise in order to design the integrated marketing
communication strategy for the Indian market. However, in this case also, the major issue that