Initiating International Business For OnePlus In Brazil: External And Internal Environment Analysis

PEST Analysis for External Environment

Question:

Discuss about the Market Potentiality of OnePlus in entering in the Market of Brazil.

In the current business scenario, contemporary business organizations have to look out for the international opportunities in order to enhance their market presence and market share. This is due to the reason that, current business state of affairs is more competitive in nature and business organizations having to opt for various strategies in order to stay ahead in the competition. Thus, initiation of the international business is one of the most effective strategies being available for the contemporary business organizations.

OnePlus is one of the leading electronic device manufacturers in the current business scenario. They were founded in China in 2013 and in this small period of time, they have been able to gain positive word of mouth and goodwill in the market. As of now, OnePlus is having 2640 employees in their organization (Oneplusstore.com 2017). The mission statement of OnePlus states that, they strive to offer the best product in the market of mobile devices with the state of art technologies. Moreover, their products are also targeted for the best world experience rather than providing mass market and affordable models (Rosenstein 2017). As of now, OnePlus is having only 5.9 percent of market share in the global smartphone market. However, OnePlus is one of the leading brands in the emerging category especially in the developing countries such as India and China. Thus, in order to gain more market share and enhancing their market presence in the global market, OnePlus is in the need of the initiation of the international business (Paik and Zhu 2013). It will help them to target and enter in new markets along with reducing the dependency on the existing market. Thus, the market opportunities will get enhanced for them.

This report will discuss about the external business environment for OnePlus to be faced by them in the host country. Moreover, the internal environment will also be evaluated in order to measure their effectiveness in dealing with the challenges in the international business. Accordingly, recommendations will be provided in order to overcome the identified challenges.

For the business profile of OnePlus, Brazil is being selected as the chosen host country. This is due to the reason that, Brazil is one of the leading developing economies in the world alongside with India and China. Moreover, the economy growth rate of Brazil is higher than various developed countries (Perry 2017). Thus, it will be a huge opportunities for OnePlus to target this country. According to the report of (Oecd.org 2017), Brazil is having low rate of inflation, which is enhancing the purchasing power of the customers. Moreover, according to the report, initiation of the business friendly policies by the government is attracting more foreign investors in the country. Due to the fact that, the target market of OnePlus is mainly the developing countries. Thus, the emerging economy of Brazil will be perfect for them to enter.

Political Environment

The business scenario in Brazil will be different than that in the existing market for OnePlus in terms of social, technological, political and other aspects. Thus, it is important to determine the external environment that will be faced by OnePlus in operating in Brazil. PEST analysis will be used in order to determine external environment of OnePlus in Brazil.

Political environment	Brazil is having stable political system in the country. However, there turbulences being noticed in their political scenario in the past and the political change are being done quickly. Another issue in their political system is the corruption. It is being reported by the transparency international that, Brazil is having ranking of 79 in terms of global corruption index (e.V 2017). Thus, business organizations investing and operating in Brazil will also have to face the challenge of corruption, which will pose threat in attaining the required permissions for business. Moreover, rapid change in the political scenario will pose threat for the business organizations due to the reason that, legislations and regulations may also change with the change in the political scenario (Scissors 2017). Thus, in operating in Brazil, OnePlus will face the challenge of adhering to the rapid change in the political scenario.
Economical environment	The next environment is the economical environment. Economy of Brazil is growing and emerging (Perry 2017). Thus, the purchasing power of the customers is increasing and accordingly the market opportunities for OnePlus will get increased. Moreover, the cost of skilled employees is also lower compared to some other countries. Thus, it will help business organizations to reduce their cost of production. However, one of the key economical issues being faced in Brazil is the higher rate of tax for the corporate. Brazil is having 15 percent corporate tax, which is higher compared to some other economies. Moreover, no incentives are being provided for generating profits in the country (Scissors 2017). Thus, the cost for the products of OnePlus will get increased.
Social environment	The social environment in Brazil is becoming more favorable for the business organizations with the growth in the middle class. This is due to the reason that, middle class constitute the major portion of the total population of Brazil. Moreover, Brazilian population is up-to-date in nature and they are open to new technologies and brand. Thus, OnePlus will have the opportunities to market their products in Brazil (Sawyer 2015). However, one of the key challenges that to be faced by them in Brazil is the social inclination towards established brands. Thus, it may get difficult for OnePlus to market their products being a new entrant in the market.
Technological environment	Technology is one of the key determining factors that to be maintained by OnePlus in enhancing their competitive advantages. However, in this case also, there are various challenges that have to face by the business organizations such as OnePlus in operating in Brazil. One of the key challenges is the inferior technological infrastructure in Brazil compared to some other developing economies (Nagamo, Stefanovitz and  Vick 2014). Thus, OnePlus will have less assistance of the domestic infrastructure in their business operation. However, it is being reported that, Brazil is rapidly improving in the information technology sector, which will offer opportunities for the business organizations in future.

Apart from the determination of the external environment, internal environment of OnePlus should also be determined. This will help to identify the effectiveness of the internal factors of them, which will pose challenge or opportunities in the operation in Brazilian market. SWOT analysis will be conducted in order to determine the internal environment of OnePlus.

Strengths	·         The features being provided by OnePlus is top notch and can be compared to the flagship devices of various global brands. Even in various cases, such as with the launch of OnePlus 5, they have offered superior features compared to the flagship devices. ·         Rolling out of updated software more frequently compared to the competitors. This enables the customers to have the latest software in their mobile device (Versavel and Lammens 2016). Thus, the devices of OnePlus are more updated compared to their competitors. ·         Features such as internal and external storage in the mobile are being superiorly offered by OnePlus. They are the first manufacturer, which offered 8 gb RAM in the mobile device along with providing 320 gb as storage. Thus, superior features being offered by them help them to stay ahead in the competition (Jean 2017). ·         The target market is one of their key strengths for OnePlus. This is due to the reason that, mainly the developing countries are being targeted by OnePlus. Thus, the market opportunities for OnePlus is more due to the reason that, growth of the economy of the developing countries is more compared to the developed countries. ·         The positioning of the product of OnePlus is targeted at the premium segments (Bacon et al. 2017). However, they are being offered in lesser price points. Thus, they are being able to target and cover more number of customers by offering premium features at more competitive price points. ·         The pricing strategy of OnePlus is helping them to create distinct brand image in the market. This is due to the reason that, the pricing of the products of OnePlus is more affordable compared to the global brands (Rosenstein 2017). On the other hand, the pricing of OnePlus is more compared to other mass market brands and products, which helps them to have different operating segments from the majority of the brands (Luu and Lubwama Muhamad 2016).
Weaknesses	·         The brand value and equity of OnePlus is less compared to other global brands such as Samsung and Apple. However, the products of OnePlus are directly competing with these brands (Kapferer 2012). Thus, people tend to prefer known brands than the new entrants. Thus, OnePlus should invest more on endorsing their brand in the host market. ·         Being a new entrant in the market, OnePlus is having shortage of experience and other required resources. Thus, it is difficult to cover all the operations in the internal market effectively. ·         As discussed earlier, major population in Brazil prefers brands. Thus, it will be difficult for OnePlus to market their products being a lesser known brand. ·         Entering in the new markets such as Brazil will make OnePlus to invest in huge manner. This is due to the reason that, service centers should also be opened by them in order to provide service to the customers. Thus, it involves huge cost for OnePlus, which also involves risks.
Opportunities	·         The economy of Brazil is rapidly growing along with the increase in the section of the middle class. Thus, the demand for new and updated technological device will get increase in the future. ·         Providing flagship devices in affordable prices will help them to attract more customers across different income segments (ETTelecom.com 2017). ·         Offering incentives and benefits by the Brazilian government in investing in the country will help to reduce the cost of settlement (En.portal.santandertrade.com 2017). ·         Demand for smartphones in the developing countries such as Brazil is rapidly increasing.
Threats	·         Entry of new competitors is one of the biggest threats due to the reason that, more organizations are entering in this sector and offering updated products (Babatunde and Adebisi 2012). Thus, in the already competitive market, OnePlus will face the threat of increase in competition.   ·         Change of the preference and requirement pattern of the customers changes rapidly. Thus, it will be a risk for OnePlus to rapidly update their product portfolio in order to cater to changing needs of the target customers. ·         OnePlus is having no experience regarding the need of the Brazilian market. Thus, it may pose a challenge for them to effectively cater to the target customers in the host market. The organizational structure should be designed in such a way that, employees from Brazil can also be included.

• One of the key challenges being identified is the political risk in Brazil. Thus, it is being recommended that, OnePlus should get in to joint partnership with another local organization. This will help them to reduce the risk in Brazil by reducing the amount of investment (Sun and Lee 2013). Moreover, having local partner will help to effectively determine the needs of the host market.
• Another identified challenge for them is the lack of brand value. Thus, it is important for OnePlus to initiate various promotional activities in Brazilian market in order to create brand identity among the target customers (Aekar and Biel 2013). It will help them to effectively compete with the established brands in the market.
• Apart from launching new products in the market, OnePlus should also initiates the process of effective service quality for their existing customers (Jahanshani et al. 2014). It will help them to enhance the brand loyalty among the existing customers and generation of positive word of mouth.

Conclusion

Thus, from the above discussion, it can be concluded that, OnePlus is having huge business opportunities in the Brazilian market considering their economy. External and internal analysis of OnePlus is also being discussed in this report. It helped to identify various challenges that may have to be faced by them in operating in the Brazilian market. Accordingly, various recommendations are also being discussed in this report, which will enhance the competitiveness and effectiveness of OnePlus in entering in the Brazilian market.

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