The inductive report paper aims at providing Ryman Healthcare, a New Zealand based company, best international expansion strategies so that it could effectively undertake international expansion in future times. Ryman Healthcare is a retirement village operator and holistic care provide to aged community in New Zealand. The name of the company is the cumulation of the two names of its founders Kevin Hickman and John Ryder. The surnames Hickman and Ryder combine together to give rise to Ryder Healthcare (Ryman Healthcare, 2019). The underlying ethos of the company is that everything that is done must be good for the mum or dad. Generally, life after retirement or during old age becomes miserable due to a lot of reasons, be it social, economic or family-related issue. The company aims at providing quality life to the old-aged mothers and fathers who have the right to live the rest of their lives on their own will and with full happiness and mental peace. Ryman Healthcare is one of the largest stocks listed company in New Zealand and has it Ryman villages in Victoria and Australia as well (Ryman Healthcare, 2019). From its very day of start till now it has progressed enormously and every member of it is a proof. Currently the business is trying to spread its international expansion wings up in the sky and for this need strategic guidance so that expansion plans become easier and convenient to take.
The limitation of the report is restricted to internationalization process as culture, lifestyle and social factors vary largely country wise. Sufficient resource for internationalization may not be there and need to consider a number of other alternatives for the success of the internationalization strategic planning (Achtenhagen, Melin & Naldi, 2013). Though it is true that success of old-age homes and care providers is a reason of our societal failure but still if quality of living is considered then obviously it has positive results at large. A pragmatic approach of the various strategies and international business aspects are considered and explained in detail in the discussion section so that Ryman healthcare remain successful in its international expansion strategic decision making.
In order to understand the strategic decision making and expansion plans for internationalization it is important to know the meaning of international expansion strategy. The international expansion strategy comprises of market entry strategies generally new market and includes a number of crucial decision-making in areas of primary focus market, target customer determination, channel strategizing, resource allocation, value offering of products and services, brand name positioning and finally development of the ultimate operating model (Banalieva & Dhanaraj, 2013). International strategies may be multidomestic, global and transnational. Business firms generally opt for international strategies for increasing market size of existing business, increase economies of scale and better learning and to gain locational advantage. Licensing is one of the crucial methods that need to be cleared for entering international business world. Every detailed aspect of international strategy in regard to the expansion plan of Ryman Healthcare is discussed in a systematic manner.
Ryman healthcare has increased revenue earning manifold in the coming years and is now liking to internationalize its business in all over Australia. The company is planning to develop a medium density Ryman village in the country and for this first site has been acquired but widespread abuse has hindered the smooth prospect of entry in to the Australian soil. Leaving controversies aside, it is obvious that overall dividends have boosted and steady growth continues. The company is looking forward to use its digital transformation opportunity into reality and is thus striving to provide better e-care to the Ryman village residents (Ryman Healthcare, 2019). The villages comprise of independent town houses, Service Apartments, Care Centre with Rest home and other Hospital level care units. Generally, people above 65 years of age find Ryman village a better option for living retirement life to the fullest. Highlighting on the business aspects, first and foremost, a preview of the business model of the company is necessary.
An independent business model of the company will help find its stand and future opportunities. Strategies for internationalization will be formulated based on the model analysis. Integrative care providence is the main objective of the company. And therefore, the business model is based on care. It is a mixture of healthcare service and property development (Ryman Healthcare, 2019). The model starts with finding the right site for developing the village and care community, cash is recycled and is re-invested in the next village project. A number of teams work collaboratively to support its intensive care function based on the deferred management fee model. The design team design the village layout as per residents’ need, construction team builds it accordingly, sales team perform sales operations and finally the operations team help it run smoothly. Self-monitoring tools help the company to evolve better and maintain better quality control and increase the scope to be nimbler in supporting business growth. They have one main version and that is being ethical, honest, transparent and fair (Ryman Healthcare, 2019). User-friendly agreement terms and conditions differentiate it from its competitors. Value for money is what they emphasis upon and the cost structurer is affordable for everybody in general. Staffs and acre providers are passionate about their work and its all about people there. Constant improvement and continuum of care is what Ryman focuses upon and have strong community support in their operational activities. Emphasis on quality health and intensive care is what Ryman healthcare is all about. The business model is very much lucrative for investor engagement and the model is one of the main bases of its strength and pillar of success. Along with this exceptional customer service is what that act as the success benchmark for the company.
Ryman healthcare is one of the most popular old-age acre home in New Zealand and is gaining competitive advantage from its close competitors (Oceania, BUPA, Arvida, MetLife care and Summerset Holdings) for years (Ryman Healthcare, 2019). Now the company is looking for international expansion outside the country and need to consider a number of factors before its internationalization. Kelly’s five factor considerations include, lack of in-depth market research, no sales and marketing channels, no product offering, insufficient local management teams and lack of local logistics planning. Prevailing market competitors in the new country need to be considered as well. In order to create a long-lasting global market competitive lead a well formatted business strategy need to be developed. The five major expansion factors include business climate, development of a global marketing strategy, regionalization, social entrepreneurship and product and service diversification (Baum, Schwens & Kabst, 2013).
Business climate comprises of various factors of business growth like economic, political, socio-cultural and technological factors. The transaction cost theory analysis is helpful in examining country wise business climate. Expansion strategies mostly rely on cost effectiveness and profitability insurance. This analysis prevents bottom-line crisis in new country functioning and help in monitoring unanticipated expenses at large. Global expansion increases economic development, job creation and business growth. A number of administrating costs, processing costs, taxation costs and licensing costs are to be included before final expansion start (Brush, 2013). Business environment varies considerably from country to country and therefore the climate for business in the country need to be scrutinzed and researched extensively. Specially, political regimes are the major catalyst for uncertainties and can cause the company incur potential loss in the long run. Economic uncertainty includes flexible interest rates, inflation, demand supply change, recession and other financial crisis.it is better not to diversify in high economic unstable countries. Technological resource support is a boon for the prospect of a company (Cannon, 2016). Major areas supported by technological advancements are transportation, communication and banking and financial services. Data protection and privacy laws vary from country to country and pose challenges to businesses in areas of confidentiality. The thought of ‘acting local while thinking Global’ will best suit the internationalization strategies of a company. Government policies need to be considered as they play huge role in setting up new business in new countries. Main international expansion methods include direct entry, acquisition, joint venture and strategic alliance. Ryman healthcare being a single operating company should go for direct entry alternative. Initial low-cost involvement, enhanced customer contact, complete control, and efficient usage of opportunities are the advantages of direct entry (Casillas & Moreno-Menéndez, 2014). Limitations include high cost for trade barriers, tariff and quotas and difficult economies of scale opportunities.
Economics integration is the aim of global expansion. A well knitted marketing strategy need to be developed, implemented and executed. Marketing team collaborated with strong project management team will see the whole process till the end. Team can be in-house or can be outsourced. The two-stage generic competitive process framework supports the accurate business model to be used for the expansion strategy (Cavusgil & Knight, 2015). Ryman can use its own unique business model of deferred management fee. The model provides information on content, structure, value and assets and transaction governance. The simple business model of Ryman is important in supporting its marketing strategies. Tactics are important in business expansion because they provide the potentiality of how much value a business entity can capture and create. Cost management in the parent company as well as competitor monitoring is supported by Tactics (Charif et al. 2017). Main perspectives of global marketing strategies include standardization, configuration-coordination and integration. Business standardization is based on homogeneity of customers response, flexibility of competitive advantage and economic homogeneity.
Geographic scope of internalization is another name of regionalization. It can be both abstract and literal. Physical location plays a crucial role in expansion planning (Wang, Kung & Byrd, 2013). If the location is not favorable the business will not succeed. Valid demand supply concern, exchange rate volatility etc. need to be considered while finalizing a location. Some sectors of businesses like renewable energy have more wider regional support as compared to other ones. Ryman being an old-age care service provider will have added advantage as they strive for communal betterment (Eberhard & Craig, 2013). But as this is a sensible sector many a times their objective could be questioned. Strong networking makes the process of regionalization more effective. Though regionalization has logistical challenges and need to be handled with care.
Social entrepreneurship is the key component of business ventures across international standards. Value business is what present entrepreneurs are focusing upon. The main resources include organizational, social, financial, human and physical ones. Strong networking among all the factors help in business success. Both cost and benefit need to be focused so that every objective of the firm gets achieved (Eriksson et al., 2015). Social soft silks are the differentiators that differentiates a company from a number of available ones. Intensive social support and acre is what that differentiates Ryman healthcare from its competitors and has helped it in attracting the market for years. Cultural sensitivity is one factor that need to be incorporated in the organizational culture and it will encompass how and why consumers feel about the organization at large. Negative perception can be fatal in the long run success of the organization (Forsgren & Johanson, 2014). Positive word of mouth will help in having better future sustainability and ethical environmental standards are other crucial factor that play huge role in the sustainable development of the organization.
Product diversification is one of the most difficult decision for strategic management team. It is the process of business opportunity expansion by the help of additional market potential of a product that is already existing in the market. Often the product may be changed, altered, improved or new marketing strategies could be devised (Sui & Baum, 2014). Diversification planning includes extensive market research, analysis of product adaptation and legal review if any. Same conditions are applicable for service diversification. Expansion of service into new territory could be called as service diversification. Product diversification is a risky step both for successful businesses or new market entrants. Diversification may be successful or may not be. An in-depth analysis of market return and market forecast along with competitive analysis need to be carried out and both business and stakeholders need equal involvement in this decision-making process (Gabrielsson & Gabrielsson, 2013). Factors such as geographical aspect, cultural value of new region and value of the product there need to be considered. Product diversification and international business expansion strategy are closely linked to one another. It is found that the ratio of foreign sales to total sales and FDI moderates positive relationship between the two. The effect is smaller if level of international orientation is comparatively higher. That means the lower and initial product diversification of the company helps the process of international expansion for new companies who are trying to extend their reach in foreign market (Godbole & Lamb, 2018). Offering a line of new product may prove fatal for new expansion, it is better to adhere to own existing products with some add-ons and take slow steps towards internationalization. To sum up in one line it can be said that product diversification has negative effect on international expansion of a business corporation.
So, it is evident that the strategies that good for home-market expansion may not be good for international expansion (Sleuwaegen & Onkelinx, 2014). So, a pre-hand study of the potential market and prevailing trends need to be focused and extensive research of every possible factor (both positive and negative) need to be incorporated so that risks are mitigated at large.
Planning is the first step of success for any firm. Without proper plan a firm can go nowhere and will became directionless in the long run. So, the primary focus of every firm is to develop a solid plan for its strategy formulation so that risks and unwanted situations could be mitigated to the extent possible. The open system theory approach is best for describing the most appropriate planning method. In this system organizational behavior is mapped through repeated cycles of input, throughput, output and feedback. This system supports long term and growth sustainability for future expansion (Hallbäck & Gabrielsson, 2013). Homeostasis balance the dynamic functionality of an open system business. Input helps in monitoring environmental deviations and negative input should be avoided to the extent possible. And positive input should be appreciated and the organization need to follow the feedback of positive input. In order to adjust environmental changes positive and negative inputs should be processed through the process of throughput (Sheng et al., 2013). Here information is analyzed and tailored strategically to balance organizational goals, values and stakeholders’ interests. The action steps taken after change adaptation is the final output. Feedback increases the effectiveness of output and helps organization to find the best strategic method for expansion.
Ryman Healthcare need to incorporate this framework of input-throughput-output framework into its core business model to have increased rate of expansion success (HAS, 2017). Before venturing into new location and new country the government structure of the country needs to be considered and they should be in line with company policies. Though the major structure and layout of the Ryman villages will be same only more upgraded version will be set up. The digitalization of technology is required to be incorporated fully into the Villages developed. Though the main strategic aspect of care providence and infrastructure will be unaltered. Customer base need to be analyzed that is percentage of retired individuals need to be studied so that the future vision of the organization remains unchanged and unaffected (Hohenthal, Johanson & Johanson, 2015). Key success factors in home country will help in developing a SWOT framework of the company and so that current state assessment becomes easier. Stakeholders need to be involved in every strategic decision made and based on the feedback yearly and 3-year or 5-year long term plans need to be devised. Plan should be in line with budgetary needs and then final plan should be implemented. Annual review of the plans and constant monitoring is required to sort out any kind of risk involved in the process.
When an organization decides to increase international expansion, all factor it plays with are uncertain starting from the very market existence of it to imaginative competition (Sassen, 2016). In strategic terms Blue ocean denotes all the industries that are not in existence till now. Market space is unknown, competition is imaginative and here demand is created instead of fighting for it (Kim, & Mauborgne, 2014). High growth opportunity is there and business remain profitable and enjoy quick success rate. In blue ocean strategy the following factors are focused upon,
A number of analytical tools are devised to support the blue ocean strategy implementation for new market entrant firms, mainly during international expansion. They are value innovation, strategy canvas, four action framework, six path framework, pioneer migrator settler map, three tires of non-customers, sequence of creating a blue ocean and buyer utility map (Kim & Mauborgne, 2017). Value innovation strategy will be best suited for Ryman healthcare as it aims at providing value care with the most affordable cost to their customers. The three tiers of non-customers will follow the provided diagrammatic approach.
If current market of customers is strong then other tiers could be controlled easily. Ryman health care has strong customer base in its home country New Zealand and it is trying expansion strategies on international base and for this reason it needs to focus on the non-consumer tier so that more and more leads can be converted into its active customers (Santos, 2016). In this way it will be easier to have strong customer base in new countries as well. And for that reason, the demographic study is of utmost importance.
In order to have strategic international market expansions both the external forces and internal organizational forces need to be studied thoroughly. Only external factors cannot support the success of the expansion plan and the various internal analysis of strategic factors need to be done as well. A summarized PEST analysis of Ryman Healthcare is provided below.
Political influences-armed conflict in US, local organizational polices, new governmental policies, taxation polices all need to be considered and Ryman is capable of controlling all political challenges and difficult circumstances effectively (Knight & Liesch, 2016).
Economic influences- the financial market efficiency, exchange rates, infrastructural support, consumer spending, and other economic performance parameters of the country need to be considered to have a vivid outlook of the organizational market positioning.
Social influences- the change of living standards, the cultural drift, the nuclear family support, family disturbances, migration, gender disparity, health and safety issues the increased job culture all has influenced the market of Ryman and in recent times more and more people are opting for Ryman villages.
Technological influences- the advent of mobile technology has changed the functioning of the Ryman health care and empowered supply chain partners have helped the organization in promoting service and quality health services to the customers. The scope of protection of intellectual property rights and patents have improved manifold due to technological upliftment.
The trend of going to old-age homes after retirement has increased manifold in the coming years and the whole system is responsible for such trend. Ryman healthcare has understood the importance and urgency of expansion and is focusing on international expansion plans for providing better life to old and retired mom and dad all over the world. Ryman being a market leader in the field of imparting quality healthcare has added advantage in the home market and this reputation need to be kept unaltered in international expansion so that customers from any part of the world support its quality service at large (Piekkari, Welch & Welch, 2014). All possible strategic factors including input-throughput framework, blue ocean strategy, social entrepreneurship and other marketing strategies have been incorporated to give a holistic view of the possible outcomes of international expansion and Ryman healthcare need to consider all the points to have a successful internationalization expansion strategy in future.
Conclusion
The way of life as well as the way of living of human beings have changed drastically due to globalization. Humans have become more rationalized and competitive but have lost their emotional connectivity while gaining competitive advantage. Nuclear families are on the rise, young people are leaving their parents’ house and sustaining their own living by themselves. Level of depression have increased in the old aged community and Ryman Healthcare is the best solution for old-aged people to reborn and re-live their lives once more in the best manner possible, full of happiness and care. In this situation Ryman healthcare has seen increased demand of its villages and therefore it has thought of international expansion to support both increased economies of scale and intensive care providence to the retired people at large.
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