Assessing Investment Attractiveness: Myanmar's Mobile Phone Industry

This report provides an analysis of the Myanmar mobile phone industry, evaluating its attractiveness for potential investment by a European company. It employs Porter's National Diamond framework to assess various factors influencing the industry's competitiveness, including factor conditions, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry. The report also considers the impact of chance and government policies on the industry. Furthermore, it discusses market entry strategies, specifically focusing on Foreign Direct Investment (FDI) policies in Myanmar, highlighting the advantages and limitations. The analysis incorporates contemporary management issues such as cross-cultural management, communication difficulties, and foreign laws and regulations. The report concludes with recommendations for the European company based on the findings of the analysis, offering insights into navigating the challenges and capitalizing on the opportunities within the Myanmar mobile phone market.

Running head: GLOBAL AND INTERNATIONAL BUISNESS CONTEXT
GLOBAL AND INTERNATIONAL BUISNESS CONTEXT
Name of the Student
Name of the University
Author note

1GLOBAL AND INTERNATIONAL BUISNESS CONTEXT
Table of Contents
Introduction........................................................................................................................2
Porter’s National Diamond Analysis..................................................................................2
Factor Condition.............................................................................................................3
Political factor.............................................................................................................4
Economical Factor......................................................................................................4
Social and Environmental Factor...............................................................................4
Technological Factor..................................................................................................5
Related and supporting industries.................................................................................5
Strategy, Structure, and Rivalry.....................................................................................6
Demand Condition.........................................................................................................7
Chance...............................................................................................................................8
Government.......................................................................................................................8
Market Entry Strategy........................................................................................................9
FDI policy in Myanmar...................................................................................................9
Advantages..................................................................................................................10
Limitation......................................................................................................................11
Recommendations.......................................................................................................11
Contemporary Management Issues................................................................................12
Cross-cultural management and communication difficulties.......................................12
Foreign laws and regulation.........................................................................................12
Conclusion.......................................................................................................................13

2GLOBAL AND INTERNATIONAL BUISNESS CONTEXT
Introduction
The Myanmar telecommunication sector has made a rapid change in their global
expansion and also accumulatesnumbers of mobile companies to encourage the
support of their infrastructural development. Some of the inland Myanmar mobile
companies are doing their business in a success rate and this range like Telenor brand.
This company has some franchised outlets also and they have new and latest handsets
like T100M, T200M, T300M and all these handsets have glass screen with high-
resolution camera in front and backside (Riasi, 2015). Vodafone is one of the strongest
companies in Europe. They want to extend their business in Myanmar and in that case,
at first, the company has to understand the internal market of Myanmar and what are
the opportunities of this new company to extend their market. However, in thesector of
telecommunication Vodafone is a unique name which is familiar in worldwide but as per
the aspects of thehandset and mobile phones, the company has started to move on
their business (Vodafone.co.uk, 2018).
Porter’s National Diamond Analysis
There are strategic aspects and choice of functions that are important to
understanding the market position of the nation. Myanmar shares the border with China,
India, Bangladesh, Laos, and Thailand so the nation has apolitical and economic
advantage due to deep sea ports. The prices of the handsets range from US$46 to
US$1500. The range of mobile uses is extending in so efficient way that 70% of the
rural people in Myanmar used mobiles for their daily works. Their business in Myanmar,
Vodafone needs to understand some deriving factors that expected better growth in
their business expansion (Fainshmidt, Smith & Judge, 2016). Through Porter’s Diamond
analysis the opportunities in Myanmar market in mobile phone industry has discussed.

3GLOBAL AND INTERNATIONAL BUISNESS CONTEXT
Factor Conditions
Related and Supporting Industries
Strategy, Structure and Rivalry
Demand Condition
Chance
Government
Figure 1:Porter’s National Diamond Diagram
(Source: Created by Author)
Porter’s Diamond model is a part of thestrategic analysis and strategic planning
process. There are basically four segregations that impacted on the national economy.
In case of Myanmar infrastructure, the range of product and services are thekey factor
that holds the entire market and in case of penetrating a market there is some limitation
and cautionary factors have in mind of the investing group.
Factor Condition
At first, the importance of Factor condition has emerged in this section and the
section covers the possible penetrating chances for Myanmar in case of extending
business in mobile phones. Vodafone has a good networking system in global term but
as they are focusing on their handsets so their business can improve a lot in Myanmar
(Anton, 2015). There are some external factors that influence the business and as
Chinese companies are making abetter strategic commitment in Myanmar and
developing their business, European companies also put their step forward and come
up for the challenges they made in case of doing business in Myanmar.

4GLOBAL AND INTERNATIONAL BUISNESS CONTEXT
Political factor
Myanmar government supports the ongoing business facilities in the nation and
that is the reason most of the Myanmar mobile companies enhancing their territorial
business. In that context, Vodafone is trying to enter the market and deliver thebest
establishment in Myanmar market. The stable political factor is important for the product
development (Byun, Lee & Kim, 2016). Myanmar government also moves their step
forward to push Vodafone Company in their market. There are some regulatory reforms
and that economic consultant that provide better chances for abusiness extension.
Market assessment and land acquisition is another factor and government help is
required for that reason.
Economical Factor
In case of economic development, resource increase, inflation, interest rates,
taxes and the amount of tax deduction is important to build their sustainable market
position. Technological advancement can enhance the business market of any of the
handset companies. As Vodafone have the knowledge in business, their executives will
focus on the digital marketing rather than print promotion (Diamond et al., 2015).
Vodafone knows the business extension policies and also set their target market and
focusing on those sections only for the promotional aspect. If people know much about
the company is coming with some stylish smartphones then they will go for these kinds
of phones and that actually encourage the economy of Myanmar.
Social and Environmental Factor
People attitude to new phones and trust over the company is the main aspectof
this segment. There are some areas where people are unable to use the phone.
Vodafone set their price at thevery low range and this is the second lowest price range
that they have been set to grab the market. There are some big range handsets but
most of the case the prices are proper as per the quality. US$46 is the starting range of
their phone and so this is socially acclaimed by people also (Castro-Gonzáles, Peña-
Vinces & Guillen, 2016). The phone has some default options like social platforms,

5GLOBAL AND INTERNATIONAL BUISNESS CONTEXT
navigation, tracker, waterproof facility, and solar recharge service. All these services
attract more people and people can find the only option where these amounts of
thefeature have given in so cheap price range. In case environmental, Myanmar
environmental condition is the big issue and if theUKbring their people in for the stat up
in business then they may not suite the weather at all, so local people investment is the
effective step to consider (Wang, 2017).
Technological Factor
In modern times, phones innovative quality and market revolution is only
depending factor for technological enhancement and sustainable condition in Myanmar.
Phones are more compact in recent times and lots of technological innovations come
day by day so in this changing globalized situation, Vodafone has set their smartphone
facilities like voice unlock, face unlock or trace the caller identity or the place of
messaging also get know from these devices (Konsolas, 2017). Technological
innovation creates the parameter of this globalized mobile phone market and Myanmar
is also affected by this, people love innovation and them waiting for new features on
their phone. A cope up strategy maintains the market position in all the time Vodafone
telecom development researched on their innovation aspects.
Related and supporting industries
Related and supporting industries basically empower the parental industry. In this
situation, Vodafone is the parental company so factors basically enhance the
productiveness of Vodafone and establish their ground in Myanmar. As per the report in
Mizzima news, 6% extra use of mobile phone has been noticed in Myanmar and that is
the reason they become the fourth fastest growing mobile center (Wonglimpiyarat,
2018). In case of handset user of their national brands, 80% of the mobile user of
Myanmar uses their first handset. So a health business scenario has noticed in that
section as the company delivers their phone at such low range and Myanmar
government also help them to push their business in an effective way. There are some
companies inter-related with this company like software and hardware companies in
Myanmar, chip manufacturing companies, camera part or accessories companies,

6GLOBAL AND INTERNATIONAL BUISNESS CONTEXT
promotional companies, and all these resource generating companies are the main
associate companies that enhance the business market of Vodafone (Deloitte.com,
2018). Software companies are developingin Myanmar and that help Vodafone to
manage their business in a new place. Change in thedomestic market is first noticed by
the company and that is the reason company enhancing their business opportunities
and maintains the business at thenew range. As Vodafone believes in man-
management and connects every people to build a better world tomorrow. They build a
good partnership with cable investment and coordinate their business with the Gigabit
society which is a broadband service of the nation (Jarungkitkul & Sukcharoensin,
2016). Connectivity, value for work, reward and loyalty and easy access to customer
support is the main aspect for Vodafone. Vodafone addressing this thing in Myanmar
also and they accumulate lots of technologically improved organization so that a better
service value can be obtained.
Strategy, Structure,and Rivalry
There are lots of mobile companies those have agood market in Myanmar. In
that case, Vodafone has to make an efficient penetration to get anentry in Myanmar.
Telenor, Ooredoo, KDDI, SingTel, Viettel Group, Qatar Telecom, Sumitomo all these
are significant mobile phone companies in Myanmar and they have to enhancetheir
business market as there is no such good competitor in Myanmar market. There are
some positive aspects of this existing company as they know the market a lot more than
any penetrating company (Cho, Moon & Yin, 2016). But the promotional strength and
the amount of expertise of market reading Vodafone has is quite enormous for any
other mobile phone company (Byun, Lee & Kim, 2016). So, in case of rivalry they are
alot more efficient from any other company. Their new phones are stylish and have
such features that other companies cannot think of it at this price. The company
explores the dimension of latest mobile phones. Their features are the main attraction
for the company and that reflected in their production.
The foreign direct strategy is the adopting strategy for this company and this is
the reason most of the investment has been done by their parental nation. UK Vodafone

7GLOBAL AND INTERNATIONAL BUISNESS CONTEXT
is the parental company and they try to expand their market in Myanmar through their
mobile device,not their networking (Castro-Gonzáles, Peña-Vinces & Guillen, 2016).
Myanmar government has given this opportunity to other business companies to
operate their business in full-fledged. There are certain limitations in case of FDI, but
Myanmar has given this opportunity to Vodafone to invest from their own. Vodafone will
do their business in own way and no other companies are tied up with them and they
are doing this business solely.
Business structure always has functional organization structure and that reflected
in their business revenue and outcome. A proper structure like theinfluence of VP, HR,
Admin and their legal counsel is there and this department following the human
resource department. The organization also consist technological department and this
department has different sections which will take care of quality, service and the relation
with media and customer (Byun, Lee & Kim, 2016).
Demand Condition
In a research, it has shown that 57% of Myanmar population aged between “15 -
65” used mobile phone. Almost 30% of them used mobile for the first time and that
showcase better demand in Myanmar (Advancing Myanmar's telecom infrastructure,
2018). Women also use mobile at high range and that showcases thebusiness need for
the company. Vodafone has this pulling power to attract people and the brand has this
trust and belief within people that they encourage the company to enhance their
business limitation. A frequent model seen in the mobile phone industry is a transform in
implementation motives as mobiles become more prevalent and people learn additional
things about them. The Myanmar infrastructure is about to come in a period of speedy
structural development as the government obtains to augment the number of
themobilephones(Byun, Lee & Kim, 2016). It encourages and supports the expansion of
mobile network communications across the nation. The emerging situation of the
country also influenced the demanding nature of the country. This shows the
percentage of people and their eagerness to use the mobile phones. Vodafone will also
emerge the national economy of Myanmar and the demand curve of the nation is also

8GLOBAL AND INTERNATIONAL BUISNESS CONTEXT
suggesting the mobile-led underway for their development. In case of joint ventures
there are certain of business breakdown devastation condition but in case solo business
ventures that operated by Vodafone only so there is less risk in such situation(Castro-
Gonzáles, Peña-Vinces & Guillen, 2016). The increasing demand shows better
involvement and that enhances better demand and development in the mass market.
Chance
Business opportunity and the investment chances are reflected in all the factors
and their related issues. These factors are somehow creating better chances for
manage the business and state the possible reason to enrich the business also. There
are some existing companies in mobile in Myanmar and their service and the
networking is very useful for Myanmar people (Castro-Gonzáles, Peña-Vinces &
Guillen, 2016). If Vodafone needs to survive their business in terms of accessing their
market for all genres of people in Myanmar then the better investment and promotional
strategy is the key factor they need to introduce in themarket so that people are getting
interested about their products and they increase their business in an effective way.
Chances are also applicable on supporting industries that means all the supporting
industries try to enhance the position of the Vodafone mobile phone industry. In that
sector, these resources are important and that provide enough demand in themarket.
As per the promotional strategy is concerned, to reach out in more people and deliver
agood amount of product for their business enhancement.
Government
Government initiation is important and relevant for the development of business
chances. There are some legal actions, land procedures, permission related matter and
all these are important for the starting a business in any nation. Myanmar government
supports any kind of business in that scenario. Foreign direct investment in that
scenario is important as Myanmar government has given full opportunity to this
sectionto foreign business(Odaka, 2015). Their import tax and duty taxes are less also

9GLOBAL AND INTERNATIONAL BUISNESS CONTEXT
and that enrich the progress path of business. Vodafone will take this chance and invest
that money in case of promotion. In Myanmar, government support and acceleration will
enhance the business opportunities and accumulate the factors that ensure better
product quality for them to sustain in the market. In case of related business, the
government also provides support to the associate business so that better demand and
maker position of the company will stand strong.
Market Entry Strategy
FDI is a form of investment with controlling ownership in a firm in one country by
an entity based in another country. The investment of the organization can be done
through either buying a company inorganically in Target Company or expanding the
work process operation in that country (Anyanwu, 2017). Foreign Direct Investment
involves the direct ownership of a high degree of control in operation to grab the
competitive environment. FDI involves a high level of resources and a high degree of
commitment from the organization. An organization can expand its business through
merger and acquisition, investment in a joint venture or the organization can construct
the facilities to open a new business venture all by itself through investment (Blonigen &
Piger, 2014). Some of the governments prohibit selling the goods produced in different
countries; however, Vodafone is going to manufacture the products in Myanmar locally
and it will also help to reduce the import duty and taxes. Import permits will not be
needed and Vodafone can make a huge employment opportunity in Myanmar. As stated
by Kasemsap (2017), making the direct investment can help to gain the services of
skilled employees in the target market and it will also help to have the intelligence of the
people. Vodafone will be more competitive in terms of selling the products at cheap
prices with all desired features in mobiles.
FDI policy in Myanmar
Article 35 of Union of Myanmar declared that Myanmar would be following the
market economy system and it started from 2011 (Myanmar-law-library.org, 2018).
Myanmar is worthy of consideration in Foreign Direct Investment due to a large

10GLOBAL AND INTERNATIONAL BUISNESS CONTEXT
population and Myanmar has educated labour force and low wages. Myanmar has a
strategic location and it has a good connection to sea and air links within European and
Asian regions. Since late 1988, Myanmar government has been trying to engage the
foreign direct investment (FDI) in Myanmar. The Government was trying to adopt a
market-oriented system for resource allocation and the government was trying to
encourage the private investment as well as entrepreneurial activities. The objectives of
Myanmar Government and Foreign Investment Law (FIL) are related the Government of
Myanmar opened up the foreign trade that includes promotions and expansion with the
acquisition of high technology (Myanmar-law-library.org, 2018). The Government of
Myanmar focused on developing the services and products that involve high capital and
it created local employment opportunity. It is related to the regional development.
In Myanmar, foreign investors need to set up the business either in form of wholly
foreign-owned or joint-venture with a partner. In case of the joint ventures, the foreign
party needs to have a minimum share of 35% of total equity. The minimum amount for
foreign capital is to be eligible under FIL (Foreign Investment Law), in case of industry, it
is required US$ 500,000 and for a service organisation, it is required US$ 300,000
(Worldbank.org, 2018). Economic activities are allowed under the law of FIL in all
sectors through notifying Myanmar Investment Commission.
Advantages
Myanmar Government identified potential investment and significant
opportunities for foreign investors. The government of Myanmar is trying to embark on
privatisation of the companies in order to increase the FDI. In addition, as stated by
Chan (2016), the legal system of Myanmar is the combination of English common law
and customary law of Family. FIL in Myanmar provides the advantage of exemption of
income tax for three consecutive years for Foreign Direct Investor and companies can
take relief from the income tax of profit if they reinvested the money. The companies
need to follow the right to pay foreign employees’ tax. In the year 2017, FDI in Myanmar
telecommunication and transportation surged to almost US$ 3 billion and manufacturing

11GLOBAL AND INTERNATIONAL BUISNESS CONTEXT
companies are coming in Myanmar investing almost US$ 1.7 billion (Mmtimes.com,
2018).
Limitation
The investors are governed by The Companies Act in locally as the application of
trade permit needs to be given along with the registration number. Vodafone has to bear
flat 30% of the tax rate in order to operate under the law of FIL (Odaka, 2015). Foreign
currency is entitled to the company and net profit will be calculated after deducting all
provisions and tax. The application procedure is complex as investors should give
estimated annual net profit, recoupment period and prospects of creating employment
and estimated annual foreign exchange rate. Investment laws in Myanmar are now in
the watch-and-see stage on a policy of the new government.
Recommendations
Most of the large organisations are shifting their investment from developed
countries to developing countries. Vodafone should sell its handsets to Myanmar market
and it needs to establish its new office to Myanmar. It should not with the option of
merger and acquisition or joint venture, Vodafone will establish its manufacturing centre
and R&D in Myanmar. In foreign investment of Vodafone should be 100% that would
allow the organisation to have a rebate in income tax. Vodafone needs to make the
extensive investment to sell the handset and manufacture the products. Myanmar has
been facing the issue of recent floods and scenario planning is necessary. MIC
announced the investment policy that supports the government 12-point policy on the
economy. Vodafone needs to research the market demand and takes the foreign direct
investment through whole ownership of the company. In the initial stage, they can lend
the towers of another company, in a later stage; Vodafone will make its own towers.