International Business Report: Westpac Bank's Market Entry Strategy

This report assesses the international market potential for Westpac Bank in France, South Korea, and Brazil. It examines business, economic, and social environments, including corruption levels, institutional frameworks, market sizes, macroeconomic factors, and cultural dimensions using various global indexes. The analysis identifies challenges such as government regulations, cultural differences, and market penetration. The report recommends strategic partnerships and concludes that France is the most suitable market. It provides insights into market entry strategies, government regulations, cultural aspects, and foreign exchange rates, along with recommendations for Westpac's global expansion.

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

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Executive summary
The aim of this report is to discuss about the business, economic and social
environments of Brazil, France and South Korea in order to determine their market
potentiality for the Westpac bank of Australia. Various dimensions are being used in this
report in order to identify the issues to be faced by Westpac in entering in these
countries. Information regarding these three countries is being gathered from various
global indexes. This report concludes that, France will be the ideal foreign country to
enter for Westpac. In addition, this report also recommends that, Westpac should
initiate strategic partnership in order enter in the foreign countries.

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Table of Contents
Introduction...................................................................................................................... 3
Country overview of France.............................................................................................3
Business environment.................................................................................................. 4
Market scenario............................................................................................................6
Macroeconomic environment....................................................................................... 7
Socio-cultural environment...........................................................................................8
Identification of the issues in operating in France.........................................................9
Country overview of South Korea.................................................................................... 9
Business environment.................................................................................................. 9
Market scenario..........................................................................................................11
Macroeconomic environment..................................................................................... 13
Socio-cultural environment.........................................................................................13
Identification of the issues in operating in South Korea.................................................14
Country overview of Brazil............................................................................................. 14
Business environment................................................................................................ 15
Market scenario..........................................................................................................17
Macroeconomic environment..................................................................................... 19
Socio-cultural environment.........................................................................................20
Identification of the issues in operating in Brazil............................................................20
Recommendations......................................................................................................... 21
Conclusion..................................................................................................................... 22
Reference.......................................................................................................................23

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Introduction
Globalization is the latest trend in the current business scenario being practiced
by the contemporary business organizations. This is due to the reason that, in the
current business scenario, competition is higher in the market and thus it is important for
the contemporary business organizations to increase the market presence beyond their
home country (Lane 2013). However, there are various modes being involved by the
contemporary business organizations in entering in the foreign markets. Few of the
suitable entering modes for the business organizations are the strategic relationship,
merger and acquisitions and import and export (Brondoni 2014). Effectiveness of the
modes is being determined by the business and social environment of the host
countries.
Westpac is the first and oldest bank of Australia. Currently, they are being
considered as one of the top four banking institutions of Australia (Westpac.com.au
2018). They are having their global presence in different countries in Asian region along
with having their presence in New Zealand, Fiji and United Kingdom. However, due to
the increase in the competition in the market, they are facing the issue with their
profitability. Thus, they are looking for entering in new markets in France, South Korea
and Brazil. This will help them to enhance their global presence along with increasing
the market share. However, it is also important for them to determine various factors in
relation to the business and social environment of these countries.
This report will discuss about the market opportunity, government regulations in
relation to the investment of these countries. Moreover, the cultural aspects, foreign
exchange rates along with other issues to be faced in entering in these countries will
also be discussed in their report. In accordance to the identified issues, various
recommendations will be discussed in this report along with discussing the effective
market entry strategies.
Country overview of France
France is one of the leading economies in the European regions with having
favorable market and business opportunities. They are also having favorable

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infrastructure for the business operation (Singh and Bourgouin 2013). The following
sections will discuss about the different elements of business environment of France.
Business environment
Figure: 1 Corruption index
Source: (e.V. 2018)
As per the corruption index, 2016 of Transparency international, France is having
the score of 69, which portrays less impact of the corruption in the country. Thus, it will
be favorable factor for Westpac to have their operation in France due to the reason that,
they will face less charge of corruption in the country.

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Figure: 2 Institutional environment of France
Source: (weforum.org 2018)
According to the global competitive index, France is having the ranking of 13 in
terms of the protection of the intellectual property. Thus, it is also another favorable
factor being faced by Westpac in investing in France. It shows that, Westpac will have
fewer risk of maintaining their intellectual and other property. However, one of the
negative factors being identified is the burden of government regulations (Bharosa et al.
2013). In this element, France is having the ranking of 121. Thus, they are having much
lower ranking in this. This will have negative impact on the business operation of
Westpac due to the reason that, Westpac will have to face more barriers in terms of the
government regulations, which will reduce the effectiveness of their business (Dreher
and Gassebner 2013). There are various other elements being identified in the above
figure which will have both positive and negative impact on the business operation of
Westpac.

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Market scenario
Figure: 3 Market size of France
Source: (weforum.org 2018)
Figure: 4 financial market of France
Source: (weforum.org 2018)
According to the report of global competitiveness index, France is having the
ranking of 9, which is quite good. Thus, Westpac will have huge market size to cater
along with having more customers. GDP of France is also on the upper side with the
ranking of 9. Thus, with having favorable GDP, the economy of the country will be high
along with having higher per capita income (Schneider 2013). Thus, Westpac will have
more market opportunity in France. According to the global competitiveness report,
France is having the ranking of 30 in terms of availability of the financial services. Thus,

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it will be an opportunity for Westpac to offer more financial services in enhancing the
ranking. France is having the ranking of 28 in terms of the affordability of the financial
services. Thus, it will be beneficial for the Westpac to offer their services in more
affordable cost. It will help them to target more customers.
Macroeconomic environment
Figure: 5 Macroeconomic environment of France
Source: (weforum.org 2018)
France is having the ranking of 15 in terms of country credit rating. Thus, they
are having favorable ranking and it portrays that, investment in France will face less risk
of defaulting. This will ensure the investment to be made by Westpac (Jafarnejad et al.
2013). Currently, France is having the exchange rate of 0.65 Euro to AUD 1. Thus, the
difference is less, which will cause less negative impact on the business operation of
Westpac.

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Socio-cultural environment
Figure: 6 Cultural dimensions of France and Australia
Source: (Hofstede Insights 2018)
According to the above figure, France is having higher ranking compared to the
home country of Westpac, Australia in terms of power distance. Thus, it portrays that,
French companies maintain more hierarchical levels compared to their Australian
counterparts (Freitag and Bauer 2013). Thus, Westpac may face issues in maintaining
their existing organizational structure in France. In terms of the masculinity, ranking of
France is lower than that of Australia. According to the reports, France is having more
feminine social culture compared to the masculine culture of Australia. Thus, Westpac
will face the issue of managing the human resources in France with their existing
human resource management policies.

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Identification of the issues in operating in France
 One of the key issues being identified is the favorable market penetration of the
financial services in France. This will create barriers for Westpac by lowering the
market opportunities for the new entrants.
 Another issue identified is the difference in the cultural aspects between Australia
and France. This will create rift between the home and host country operation of
Westpac.
 Westpac will have to face more stringent government regulations in their
business operation in France. Thus, it will create barrier in effectively catering to
the local customers with their existing service portfolio (Vandemoortele and
Deconinck 2013).
Country overview of South Korea
Among the Asian countries, South Korea is one of the leading economies with
having favorable financial and other infrastructure (Bruno and Shin 2014). They are also
one of the leading hubs of electronics and technologies in the world. The following
sections will discuss about the various environmental elements of South Korea.

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Business environment
Figure: 7 Corruption index
Source: (e.V. 2018)
According to the corruption index, 2016, South Korea is having the ranking of 53
in the world. Thus, it portrays that, they are no major impact of corruption on the
business However, their ranking is stands in the middle positions and thus,
organizations may have to face negative impact of the corruption in their business
operation.

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Figure: 8 most problematic factors for business in South Korea
Source: (weforum.org 2018)
According to the above figure, one of the key problematic factors of doing
business in South Korea is the instability of the policy of the government. Thus,
Westpac will face the issue of instability in the policy making, which will have negative
impact on the business operation of Westpac (Baxa, Horvath and Vasicek 2013).

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Figure: 9 Institutional environment of South Korea
Source: (weforum.org 2018)
The above figure shows that, South Korea is having the ranking of 68 in terms of
the intellectual property rights. Thus, the ranking of them is not favorable and it may
have negative impact on the business operation of Westpac. Moreover, it is also being
seen that, South Korea is having the ranking of 96 in terms of burden of government
regulations. Thus, this ranking is hugely negative and it will surely have negative
implications on the business. Government bureaucracy is another factor in South Korea,
which is being identified as one of the key problematic factors for the business (Buffat
2015).
Market scenario
Figure: 10 Market size of South Korea
Source: (weforum.org 2018)

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Figure: 11 financial market of South Korea
Source: (weforum.org 2018)
South Korea is having the ranking of 12 in terms of the domestic market size.
Thus, the market opportunity is favorable for the business organizations. In terms of the
GDP also, they are standing at the ranking of 12. Thus, business organizations like
Westpac will have favorable market size and opportunities for business in South Korea.
However, on the other hand, South Korea is having the ranking of 100 in terms of the
availability of the financial services (Demirguc-Kunt and Klapper 2013). Though the
ranking is poor but it will prove opportunities for Westpac. This is due to the reason that,
lower ranking depicts that; there are still huge portions of the total population that are
outside of the banking system. Thus, Westpac can tap this customer segment.

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Macroeconomic environment
Figure: 12 Macroeconomic environment of South Korea
Source: (weforum.org 2018)
In terms of the credit rating, South Korea stands at 22, which denotes that, it is
safe to invest in South Korea. Westpac will have less risk associated in operating in the
market of South Korea. In terms of the exchange rate, 1 AUD is equals to 859.76 Won.
This will have favorable impact on the Australian business organizations such as
Westpac due to the reason that, the return will higher for them.
Socio-cultural environment

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Figure: 13 Cultural dimensions of South Korea and Australia
Source: (Hofstede Insights 2018)
According to the above figure, South Korea is having more hierarchical approach
compared to the Australia. Thus, similar to the French situation, it will be difficult for the
Westpac to maintain their existing organizational structure and process in South Korea.
In terms of the masculinity, South Korea is having much lower ranking compared to the
Australia. Thus, in this case also, it will be difficult for Westpac to have their existing
human resource management in South Korea.
Identification of the issues in operating in South Korea
 One of the key issues being identified for the business organizations in South
Korea is the policy instability (Rosenthal 2014). This will create barrier for
Westpac to effectively operate in the country.
 Access to the finance is another identified issue. This will create barrier for
Westpac in having access to fund for further investment in the country.
 Another key issue is the cultural difference between the two countries, which will
create issues between the host and home country operations of Westpac (Ahem,
Daminelli and Fracassi 2015).
Country overview of Brazil
Brazil is one of the leading developing countries in the world in the recent time.
They are having positive growth of GDP compared to some of the developed countries,
which is further attracting more foreign investments in the country (Balter 2014). The
following sections will discuss about the various business environments of Brazil.

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Business environment
Figure: 14 Corruption ranking of Brazil
Source: (e.V. 2018)
According to the corruption index, Brazil is having the score of 40 as of 2016.
This shows the inclination towards the corrupted system in the country. Thus, it will be a
huge negative factor for the business organizations such as Westpac. Business
operation in Brazil will cause difficulties in terms of the corruption for Westpac.

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Figure: 15 Problematic factors in doing business in Brazil
Source: (weforum.org 2018)
According to the global competitiveness index also, corruption is the most
problematic factor to be faced by the business organization in doing business in Brazil
(Timmons and Garfias 2015). It is followed by the inefficiency of government
bureaucracy in the country. Thus, Westpac will have various barriers from the side of
the government in doing business in Brazil. However, another distinctive factor being
identified is the possibility of coup in the government. Though this will be considered as
the political problem but it will cause negative impact on the business operations.

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Figure: 16 Institutional environment of Brazil
Source: (weforum.org 2018)
According to the global competitive index, Brazil is having the ranking of 108 in
terms of intellectual property right (May 2013). Thus, they are having the lowest ranking
among the three countries discussed in this report. Westpac will face negative impact in
terms of protecting their intellectual property in Brazil. Moreover, the above figures also
show that, South Korea is having the ranking of 102 in terms of the burden of
government regulations. Thus, operation in Brazil will cause Westpac face added
burden of the government rules and regulations.
Market scenario

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Figure: 17 Market size of Brazil
Source: (weforum.org 2018)
Figure: 18 financial markets in Brazil
Source: (weforum.org 2018)
In terms of the domestic market size, Brazil stands at 66, which is quite lower
compared to the other two countries. Thus, Westpac will face the issue of lower market
opportunities in Brazil compared to other countries. Moreover, with having lower market
size, the market potentiality of Westpac will also be lower in the market of Brazil. In
terms of the GDP also, Brazil is having the lower ranking of 68. Thus, the per capita
income of Brazil will also be lower compared to other two countries (Higgins and Pereira
2014). They are having the ranking of 85 in terms of the availability of the financial
services. Thus, Westpac will have the opportunity of having a good amount of untapped
market. Moreover, they are also having lower ranking in terms of the affordability of the
financial services. Thus, affordable service from the Westpac will help to attract more
customers.

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Macroeconomic environment
Figure: 19 microenvironment of Brazil
Source: (weforum.org 2018)
Brazil is having ranking of 61 in terms of credit rating. Though the ranking is
favorable and somewhat positive but it is lower compared to the credit ratings of other
two countries. Thus, Westpac will face more risk in relation to their investment in Brazil
compared to investment in South Korea and France. In terms of the currency exchange
rate, 1 AUD is equals to 2.59 Brazilian real. Thus, in this case, Westpac will have the
advantages of having higher return from their investment in Brazil.

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Socio-cultural environment
Figure: 20 cultural dimensions of Brazil and Australia
Source: (Hofstede Insights 2018)
The power distance of Brazil is similar to what South Korea and France are
having. Thus, they are also more inclined towards maintaining hierarchical order in the
organization. Being an Australian company, Westpac is having more flexible
organizational structure and thus it will be difficult for them to cope up with the cultural
difference in Brazil. However, in terms of the masculinity of the society, Brazil is having
the score of 49, which is intermediate. Thus, compared to other two countries, Westpac
will face less difficulty in maintaining their employees in Brazil.
Identification of the issues in operating in Brazil
 One of the key issues being identified is the corruption. It is being identified as
the most problematic factor for doing business in Brazil.

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 Another key issue being identified is the size of the market. Though Brazil is
developing at a rapid pace, but their market size is small compared to other two
countries. Thus, the market opportunity for Westpac will be lower in Brazil.
 Risk of coup is also being identified as one of the key issues for the business
organizations in doing business in Brazil (Rittinger and Cleary 2013). This is due
to the reason that, coup will cause disruption in the governmental activities and
will cause disruption in the entire market and business scenario.
Recommendations
Thus, from the above discussion, there are various issues being identified in
investing in three different countries by Westpac. The following section will discuss
about the various recommended steps to be initiated in order to overcome the issues
and have an effective and ideal market entry in the target market.
 From the analysis of the three countries of France, South Korea and Brazil, it is
being recommended that, France will be the ideal country to enter among the
three. This is due to the reason that, in the above discussion, it is being found
that, all the three countries are more or less similar kind of issues. However, the
business, market and socio-cultural environment of France is comparatively
better and favorable than the other two countries. Thus, entering the market of
France will have maximum benefit and return for Westpac.
 It is being recommended that, Westpac should initiate the mode of strategic
relationship or partnership by the way of merger or acquisitions. This is due to
the reason that, Westpac is the service provider of financial services and the
concept of import and export will not be applicable for them. However, strategic
partnership should be initiated in order to reduce the risk being associated with
the direct investment. Initiation of the strategic partnership through the means of
the merger or acquisitions will help Westpac to leverage the brand value of the
other company in the local market. Moreover, this strategy will also help to have
the access to the resources and the assets of the local company, which will be
beneficial for Westpac in the initial stage.

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 It is also being recommended that, Westpac should initiate the geocentric
approach for the management of their employees in the foreign market. This is
due to the reason that, geocentric approach refers to the recruitment and
selection of the employees from both the home and host countries according to
the requirement and qualifications. Thus, it will help them to effectively deal with
the cultural differences between France and other countries with Australia.
Conclusion
Thus, from the above discussion, it can be concluded that, three countries
namely South Korea, Brazil and France are having different issues and opportunities in
doing business. However, this report concludes that France is having more
opportunities compared to other two countries. Moreover, this report analyzed various
environmental factors of these three countries in order to identify the key issues to be
faced by Westpac in doing business there. It is being recommended in this report that,
Westpac should enter the market of France with the means of Strategic partnership. It
will have maximum return from their investment in the foreign country.

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