Appropriate international business strategies hold immense importance for the present market performance and future business growth of an international company. Appropriate strategic decision making enables companies to manage market risks more effectively and gain higher level of market sustainability. (Calabrese et al. 2019). One of the international strategies which most of an international company adopt is being present in both developed markets and emerging markets. A second common international strategy which the international company takes is expanding into new markets. Expanding into new markets enables the company gain access to more resources and bases of customers or revenue bases (Rosca, Agarwal and Brem 2020). International expansion enhances risk absorbing capacity and risk propensity of the international company (Buckley et al. 2018).
The aim of the report would be evaluating a current international strategy adopted by a company. It would then go on to recommend a chosen market which the company could enter and an entry mode which the company could use to enter the market chosen. The company chosen for the research is M/s Hayward Tyler. The current international strategy of the company chosen is its presence in both developed markets and emerging markets. The country chosen for expansion in Australia and the mode of entry chosen is foreign direct investment. PEST of Australia would be conducted to support the nomination of the country as the market which Hayward Tyler could enter. Justification would also be provided for opting for FDI as the mode of entry to enter Australia.
The scope of the report would include the international strategy of Hayward Tyler which is having offices in both developed markets and emerging markets. The scope of the report would include PEST analysis of Australia to substantiate choosing the country as the new host country which the company could enter. The scope of the report would also include justifying FDI as the chosen mode of entry which the company consider to enter Australia.
The report would be divided into four main parts. The first part would introduce the context and aim of the report. It would also mention the company on which the research would be based namely, Hayward Tyler. It would also mention the chosen which the company could enter namely, Australia. The introductory chapter would also mention the chosen entry mode which Hayward Tyler could adopt to expand into Australia, the FDI mode. The second chapter would evaluate the chosen current international strategy which Hayward Tyler has already adopted which is, having offices in both developed markets and emerging markets. The third chapter or part would involve conducting a PEST analysis of Australia to suffice its choice as the prospective market which Hayward Tyler can aim to enter. The third part would revolve around justifying FDI as the proposed entry mode to enter Australia.
M/s Hayward Tyler is an international company which manufactures as well as markets international pumps and motors. The company has been operating in the market over since over 200 years and has its headquarters in the United States of America. The host countries of the company include the United Kingdom, China and India. The company has both manufacturing facilities and repair facilities in these markets. The product line of Hayward Tyler consists of nuclear pumps, speciality pump, positive displacement pump and canned motor pumps.
One of the main international strategies adopted by Hayward Tyler which has come into the light upon analysis of its official website is its presence in both developed markets and emerging markets. The company has manufacturing plants and repair facilities in both the United States and the United Kingdom, both of which are developed markets. The company also has presence in India and China, which are emerging markets.
|
Position |
Country |
Numbers of nuclear reactors as on October 2021 |
|
1 |
The United States of America |
93 |
|
2 |
France |
56 |
|
3 |
China |
51 |
|
4 |
Russia |
38 |
|
5 |
Japan |
33 |
|
6 |
South Korea |
24 |
|
7 |
India |
23 |
|
8 |
Canada |
19 |
|
9 |
Ukraine |
15 |
|
10 |
The United Kingdom |
13 |
Figure 1. Table showing top ten countries in terms of number of nuclear plants
(Source: Statista.com. 2022)
It can be evaluated that the international strategy of being present in both developed markets and emerging markets which Hayward Tyler adopts is appropriate on several grounds. The company has presence in the United States of America and the United Kingdom which are developed countries. It also has offices, manufacturing plants and repair plants in India and China, the two major emerging economies today (Haywardtyler.com. 2022). It can be pointed out that all these countries lead the world in terms of nuclear reactors. The United States alone has as many as 93 nuclear reactors whereas China has 51 nuclear reactors. India and the United Kingdom have 23 and 13 nuclear reactors respectively (Statista.com. 2022). This means these countries have ever increasing demands for nuclear pumps. This means that the company can generate consistent demands for nuclear pumps in these countries as well as their neighbouring countries having nuclear reactors. For example, the company can manufacture pumps for the Canadian market in its manufacturing plants located in the United States. Thus, it can be justified that the international strategy of the company enables it to serve multiple markets, thereby generating immense revenue and a strong global position.
Secondly, presence in both developed and emerging countries would enable Hayward Tyler enjoy consistent business growth. Emerging economies like India and China are undergoing immense industrialisation and economic development (Un.org. 2022). This means there would increase in the number of manufacturing companies in the countries which means they would be rise in the demands for industrial pumps in these markets. Hayward Tyler consequently would be able to more industrial pumps in these markets and generate more revenue. Thus, it can be established on the basis of the analysis of the above findings that the international strategy of Hayward Tyler to be present in both developed economies and emerging economies is appropriate.
It can be recommended that Hayward Tyler should aim to enter Australia. The recommendation for Australia as an appropriate host country would be justified by the PEST analysis below:
Australia is an extremely politically stable economy As per 2021 rankings, Australia boasts an enviable 5th position in terms of political stability (Usnews.com. 2022). This means that the Government of Australia is able to form strong laws to promote industrialisation. This is evident from the fact that the Department of Foreign Affairs and Trade, Government of Australia has a dedicated web page on its official website to provide information to foreign companies seeking to enter Australia (Dfat.gov.au. 2022). Thus, it can be established that Hayward Tyler by entering Australia would be able to enjoy strong support from the Government of Australia which justifies the company’s entry into the country.
Hayward Tyler upon entering Australia can take advantage of the strong bilateral relationships which the Government of Australia shares in most of the countries. The Australian Government shares strong bilateral relationship with the United States of America, the home country of the company (Dfat.gov.au. 2022). Australia is one of the founding nations of the Commonwealth which is headed by HM Queen Elizabeth II at present (Dfat.gov.au. 2022). Australia shares a strong relationship with India (India.embassy.gov.au. 2022). Thus, it can be established on the basis of these facts that Hayward Tyler by entering Australia would be able to utilise the strong bilateral relationships which the Australian Government shares with these countries and enjoy several benefits. For example, it can easily export its products manufactured in Australia to countries having strong bilateral relationships with the Australian government including the USA, the UK as well as India. However, bilateral relationships of Australia and China are weakening (Aph.gov.au. 2022). The Chinese government is imposing higher taxes on the American companies as the outcome of the ongoing trade war between the United States and China (BBC.com. 2020). There have been reports of strict actions against companies for difference of interests. China is one of the four important host countries of Hayward Tyler. This means that Hayward Tyler, being an American company may face actions like imposing of higher tax rates in China. Imposition of higher rates would the operations of the company in China less profitable or even difficult. The company may even find it difficult to expand its business within China owing to the hostile business environment in the country. Australia on the other hand can provide several benefits to the company including FDI facilities (Dfat.gov.au. 2022). Thus, it can be justified in the light on the analysis that Hayward Tyler should enter Australia.
Hayward Tyler should enter Australia to diversify the negative effects which Brexit may have on its UK operations. The European Union is the largest trading partner of the UK (Ec.europa.eu. 202). This means that the British divisions of Hayward Tyler is dependent on the EU countries for generation a major portion of its business generation in Europe. However, the companies operating from the UK are having to pay higher taxes at present after Brexit (Thomas and Foster 2021). This means that the Brexit is responsible of increasing the expenses of the company pertaining to its UK operations. The company in order to curtail its expenses in order to operate in the UK either have to downscale its operations or cede the EU market. Australia shares free trade agreements with New Zealand and ASEAN countries. The ASEAN countries include Brunei, Laos, Malaysia, Cambodia, Indonesia, Myanmar, Vietnam, Thailand, Philippines and Singapore (Austrade.gov.au. 2022). The Singapore-Malaysia corridor is becoming increasing important as far as trends of global trade is concerned (Tan 2022). This means by entering Australia Hayward Tyler can take advantage of the free trade agreements which Australia has with ASEAN and New Zealand. It can take advantage of the Singapore-Malaysia corridor to expand its business across Asia. This would enable the company generate an immense base of revenue to diversify the losses it suffers owing to the Brexit as far as its UK operations are concerned. The company would also be able to reduce its dependence on China to operate in Asia.
The following are the economic factors which would encourage Hayward Tyler enter Australia to strengthen its market position:
Figure 2. Graph showing GDP of Australia
(Source: Tradingeconomics.com. 2022)
The GDP of Australia is extremely high. The GDP of the country in 2020 has been $bn 1330.9 in 2020 (Tradingeconomics.com. 2022). This means that the country experiences high level of industrial productivity. It can be construed from this fact there would be high demand for pumps used in different types of industrial operations in different types of industrials. This means Hayward Tyler by entering Australia would be able to gain a large base of industrial customers to which it would sell different types of pumps and generate high revenue. The economy of Australia has suffered a downfall owing to the coronavirus pandemic but has recovered to a great extent. Household spending and business investments have increased gradually (BBC.com. 2021). This means that the commercial activities including manufacturing activities and mining activities requiring uses of pumps of different types would increase gradually. This means that there would be increase in demand for industrial pumps. Hayward Tyler should enter the Australia to cater to increase market demand for industrial pumps and strengthen its position in the Asia-Pacific region. Thus, it can be justified on the basis of the discussion that Hayward Tyler should enter the Australian economy.
Hayward Tyler can obtain skilled manpower by entering Australia. Australian labour market is recovering fast from the effects of coronavirus pandemic. The rate of employment in the country has risen (Heath 2021). The participation rate in February 2022 has been 66.4% from 66.2% in January 2022 (Abs.gov.au. 2022). This means that the demand for jobs is increasing in Australia. This means Hayward Tyler can attract skilled manpower in the country and achieve high level of productivity. Thus, it can be justified that Hayward Tyler should enter Australia.
Figure 3. Table showing employment rate in Australia
(Source: Abs.gov.au. 2022)
The following are the social factors which would encourage Hayward Tyler to enter Australia:
Figure 4. Graph showing per capita of Australia
(Source: Tradingeconomics.com. 2022)
Australia experiences a very high per capita income. The per capita income of Australia has been $58020.45 in 2020 in comparison to almost $59000 in 2019 (Tradingeconomics.com. 2022). This fall in the per capita income can be attributed to the economic downturn and rising unemployment rates which Australia has suffered owing to the coronavirus pandemic (Murphy 2020). However, the economic conditions of Australia is improving (BBC.com. 2021). The rate of employment is rising gradually (Abs.gov.au. 2022). This means that the people in the country would in general have higher disposable income which means they would likely buy more goods including expensive goods. This would go on to create more demands for goods in the Australian economy. The companies operating in different sectors would ramp up their production to cater to this increase in market demand for goods. Some of the companies in order to expand their production capacity would have new industrial pumps installed, have their existing industrial pumps modernised or both. This means there would be increase in the demand in industrial pumps in the Australian market. Hayward Tyler should enter the Australian market to cater to this increase in demand for industrial pumps. Thus, it can be justified on the basis of the analysis of the facts that the company should enter the Australian economy to attain more business growth.
One of the main social factors which Hayward Tyler could exploit by entering Australia is the pandemic. The ongoing coronavirus pandemic has resulted in the economic downturn and massive unemployment in Australia (Murphy 2020). It is being predicted that there would more be more pandemics in the future (BBC.com. 2022). Pandemics are apparently just threats to Hayward Tyler as far as entering Australia is concerned. However, the company can deal with the pandemic situations and derive business opportunities from them. For example, more pandemics in the future would mean that there would be more requirements to spray sanitizers both in home and commercial organisations. There would be more requirements to sanitize factory shades, warehouses and office buildings. Hayward Tyler specialises in manufacturing of industrial pumps (Haywardtyler.com. 2022). The company can develop innovative pumps of different types which could be used to spray sanitizer in different forms like powder, liquid and gas. For example, the company can portable pumps which could be used to sanitize large areas like factory shades and stadiums. The company can develop small size spray pumps which could be used in work stations and homes. Thus, Hayward Tyler can optimise the pandemic situations to expand its product line by developing new types of pumps. In fact, the company can manufacture and supply pumps to companies manufacturing sanitizer products. Thus, it can be established that Hayward Tyler can use the pandemic situations to acquire new clients, thereby strengthening its market position. Thus, it can be justified that Hayward Tyler should enter the market of Australia.
Hayward Tyler can take advantage of several technological factors in Australia if it enter the market:
Australia is attributed with a strong transport network. The country has well maintained road networks, railway networks, sea ports, air ports and bridges (Infrastructureaustralia.gov.au. 2019). This makes movement of bulky goods like metals easy from one part of Australia to another and even from other countries. Hayward Tyler being an industrial pump manufacturing company would be required to procure heavy goods like metals and plants to manufacture plants. It would also have to transport pumps to the market for sale. The company can procure raw materials and plants as well as transport manufactured pumps easily using the strong infrastructure of Australia. Thus, it can be justified that Hayward Tyler should enter Australia.
The Australian ecommerce market is the eleventh largest ecommerce market in the world. It is expected that the ecommerce market in Australia would attain a size of $32.3 billion in 2024 (Trade.gov. 2022). Selling goods on the ecommerce platform is one of the most important global trade trends in the B2B market (Vitikainen 2021). Hayward Tyler by entering Australia can sell more finished products to its clients directly using the ecommerce platforms. The company can also use e-procurement to procure raw materials and plants in the country, thereby limiting its procurement costs. Thus, it can be established on the basis of the discussion that Hayward Tyler should enter Australia to take advantage of its developing ecommerce market.
Hayward Tyler is recommended to use foreign direct investment or FDI to enter and operate in Australia. Entry models like export and franchisee may be less expensive in comparison to FDI. However, FDI enables more direct control over the target host market which export and franchisee models do not (Blackburne and Buckley 2019). Hayward Tyler should invest in assets like properties and factory shades in Australia to set up its manufacturing, marketing as well after sales services in the country. This would enable the company cater better to the companies in the country and generate more revenue.
Conclusion:
It can be concluded on the basis of the discussion that Hayward Tyler should enter Australia using the FDI mode. It has come into the light upon from the discussion that entering Australia would enable the company enjoy several advantages like strong transport infrastructure and market demand for industrial pumps. Entering Australia can also enable the company diversify the losses it is facing owing to Brexit and the US-China trade war.
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