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.
France is one of the leading economies in the European regions with having favorable market and business opportunities. They are also having favorable infrastructure for the business operation (Singh and Bourgouin 2013). The following sections will discuss about the different elements of business environment of France.
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.
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.
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, 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.
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.
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.
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.
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.
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).
outh 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).
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.
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.
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.
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.
Reference
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