Market Entry & Business Level Strategy For Card Factory In The Chinese Market

1. External Environment and Industry Competition

Strategic management includes the formulation and implementation of organizational goals and initiatives based on the existing resources and capabilities (Ethiraj, Gambardella and Helfat 2016). The organization chosen of the study is Card Factory. It is a popular gift card company in United Kingdom, which offers outstanding gift cards at affordable price (CardFactory.co.uk 2017). The study will develop a business level strategy and market entry mode for Card Factory towards entering in China Market. The study will analyze the external market and industry competition for the organization in China market. Furthermore, the study will also indentify the resources and capabilities of the organization towards gaining competitive advantage in China market. Moreover, the study will also evaluate the current vision and mission statement of the organization with respect to its entry in China market. The study will develop a SWOT analysis of the organization and recommend an effective business-level international strategy for and market entry mode towards entering in China market.

External Environment (PESTLE Analysis)

External environment analysis highlights the major macro level factors, which can have major impact of the business performance of an organization (Bettis et al. 2015). PESTLE analysis tool is the best method for analysis and monitoring the macro environmental factors, which can be threats or opportunities for an organization in a specified market (Chen, Delmas and Lieberman 2015). External environment play an important role towards shaping the future of an organization. Hence, in order to penetrate in a new market, it is highly important to identify the threats and opportunities of that new market. Card Factory is going to enter Chinese Market towards expanding their business internationally. In order to check the feasibility of the organization for Chinese market, PESTLE analysis is done.

PESTLE Analysis of Card Factory for Chinese Market
Political Factor   Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	· Single party system leads political stability and less corruption in China. Therefore, Card Factory is going to get favorable business condition for their business. · Favorable Government support for business in china can help Card Factory to expand their business · Sudden changes and restriction of China Government for foreign business can limit the business of the Card Factory · Card factory can also get reduced tax rate in China · Low wage rate and less labor laws can be favorable for Card Factory in running its business in China (BBC News 2017)
Economic Factor	· Strong economic condition of China can be favorable for card factory in the China market. However, there is dynamism in the economic condition. · The inflation rate of China is quite manageable, which is also positive for the organization · Gaps in the currency exchange rate between UK and China may hamper the business condition of Card Factory (Bergh et al. 2014)
Social Factory	· The people of China have modest and easy lifestyle can be favorable for Card Factory. People are highly willing give gifts to others in each occasion. · Gift giving manners are quite strong in China, which can be favorable for Cad Factory · Chinese people have higher values for their nearer ones for which they are likely to give gift to each others. It can enhance scope of the organization in China Market.
Technological Factor	· China is highly concentrated on developing their technology, which can assist the business of the organization · The organization uses EMV technology for card personalization, which can attract the China Market (Vogel and Güttel 2013)
Legal Factor	· The organization has to maintain strict employment law and advertising policies · Labeling of products is highly necessary in China market (Hg.org 2017)
Environmental Factor	· Card factory is to adhere to the strict environmental laws of China Government · Card factory adhere to environmental laws through defending the utilization of plastic bags (Kaiman 2017)

Table 1: External Environment Analysis of Card Factory in China Market

(Source: Hambrick, Humphrey and Gupta 2015)

Industry competition can best be analyzed through Porter’s Five Force Model.

Industry Competition for Card Factory in China Market (Porter’s Five Force Model)
Threats of New Entrants	· With the growing demands for gifts in China, various new gift companies are establishing through creating competition among each others. · Card Factory can face high threats of new entrants from the gift companies like Three Stone Kite Company, UCCA Store and others (Norberg 2017)
Threats of Substitute	· With the emergence of digital gift apps and other mediums can create high threats of substitute for Card Factory in China market
Rivalry	· The increasing gift giving manners of Chinese people have given rise to various gift companies · Card factory can face high competitive rivalry in China market from China & Gift Mart and Alibaba (Hennes and Schenck 2014)
Bargaining Power of Buyers	· Customers get huge option to avail their gifts from various alternative gift stores in China market · Card Factory can face high bargaining power from buyer, as they have huge alternative companies to buy their gifts
Bargaining Power of Suppliers	· The organization can historically exploit the relationship with suppliers · Suppliers can have less bargaining power on Card Factory in China market (Khouja and Zhou 2015)

Table 2: Industry Competition of Card Factory in China Market

(Source: Foss and Hallberg 2014)

Figure 1: Porter’s Five Force Model of Card Factory in China Market

Source: (Rosenberg Hansen and Ferlie 2016)

Competitive advantage provides an edge over the competitors and generates higher value for the customers of an organization. Generating competitive advantage requires to review the core capabilities and resources of the organization and to apply those into the business model for creating value to the customers (Zietsma, Greenwood and Langley 2014). Card Factory has some unique resources and capabilities, which can have high potential towards creating competitive advantage in its new market China. Moreover, resources and capabilities towards creating competitive advantage in China can demonstrated through Porter’s Generic Model.

Competitive Advantage in China Market
Cost Leadership	· Card Factory has the ability to produce its products at lowest cost. Therefore, the organization can set low cost for their gift cards in China market. It can increase the market share of the organization in China market. · The organization has enough capital resource towards investing in production assets. It can lead to effective product process by reducing production cost and gain competitive advantage in China market (Greco, Cricelli and Grimaldi 2013). · The organization also has efficient distribution channel, which can lead to gain competitive advantage over the rivals in China market.
Differentiation	· Strong employee strength and high level of expertise in process manufacturing assist the organization to produce high quality gift cards. The quality of the Gifts cards can be a source of competitive advantage for Card factory in China Market. · Creative and highly skilled development team can produce customized gift cards for the customers of China, which can bring competitive advantage over the rivals (Rosenberg Hansen and Ferlie 2016). · The organization has access to leading scientific research, which initiated online options for selling the cards. It can also be the source of competitive advantage in China Market. · The customers of China can avail complete package for any party, which can be a unique attraction of the people in China. · The corporate reputation of Card factory and its innovation would definitely add high competitive advantage to it during the operation in China (Cohen and Amorós 2014).
Focus	· The organization is quite able to meet the demand of middle income group customer, which can also help in gaining competitive advantage in China. · The organization consistently maintains modern touch in its gift cards for attracting young customer group. It can also attract most of young customer group of China.

Table 3: Potential Competitive Advantage of Card Factory in China

(Source: Newbert, David and Han 2014)

Current Vision and Mission in UK

UK Vision	· Card Factory promotes the means of social expression and celebration of life. · It is aimed at producing outstanding quality cards having exceptional values.
UK Mission	· Card Factory strives to achieve excellence in their service towards enriching and ameliorate everyday living experience of people. · It is aimed at continuous improvement of their products through innovation and quality · Card Factory is highly committed towards mastering at the art of personalization

Table 4: Current Vision and Mission of Card Factory in UK

(Source: CardFactory.co.uk 2017)

Vision and mission statement build the foundation of an organization. It reflects the excellence of an organization clearly and creates impact on the consumer minds. Therefore, the vision and mission statement should be clear enough for providing the actual picture of the organization to the customers. Moreover, while operating internationally, there should a minor change in the vision and mission of an organization. Moreover, the vision and mission statement of a multinational organization should reflect a world view in its vision and mission statement (Khouja and Zhou 2015). Likewise, Card Factory should reframe its vision and mission statement and make minor changes in it, while operating in China.

2. Competitive Advantage in Chinese Market

Reframed Vision	· Card Factory seeks to attain kindhearted connection in the world expressed through deepest sentiments · It is aimed at making difference in each life through valuing their feelings
Reframed Mission	· Card factory is aimed at identifying distinguished performance, which is crucial to fulfill broad targets · It strives to realize novelty and innovation at every areas of business towards expressing world emotion

Table 5: Reframed Vision and Mission Statement of Card Factory

(Source: Created by Author)

SWOT Analysis of Card Factory
Strength	· Higher value position through high level of efficiency in management · Card factory has not much dependency on the suppliers and it can design and produce its own cards · Strong online sales option can be highly beneficial in China Market · Strong employee strength and high level of expertise sustain business excellence · Effective distribution channel can be effective for Card factory in running business in China market · The quality and complete party packages are the special attraction of the organization, which can also sustained in China Market (Sharp, Bergh and Li 2013)
Weakness	· The organization is stuck in price range · It is not highly capable of adjusting with frequent changes in gift card industry · Limited card range in the online medium (Khouja and Zhou 2015)
Opportunity	· Opportunity to expand internationally beyond UK · Improving the online market · Diversification of products and making them available in online channels
Threats	· Currently facing competition in UK from  Clinton Cards, Moonpig, Scribblers · Potential competition in China Market from China & Gift Mart and Alibaba (Vogel and Güttel 2013)

Table 6: SWOT Analysis of Card Factory

(Source: Sharp, Bergh and Li 2013)

Transnational Strategy

Business level international strategy guides organizational efforts towards operating business globally. While operating in China, Card factory should have to adopt an effective business level international strategy towards operating in the country effectively. Card Factory should adopt Transnational Strategy towards operating in China. In this strategy, the organization should align their business with the local needs of China. Moreover, the organization should build vision and individual commitment with an integrated network. The assets and operations of the organization should be either centralized or decentralized as the organizational needs.

The global coordination of the organization should be highly integrated. Furthermore, the organization should provide local flexibility with their organizational strategies and structures. Moreover, the organization should add some specialized touches in all their cards, which will express the special value of Chinese people. Furthermore, the organization should have an overall understanding of the China market and specific demand of the people. As per this analysis, the organization should offer customized products to the customers of China.

Acquisition Mode

While going to operate in China, Card Factory can adopt acquisition strategy mode for entering in the country. In this mode, the organization should either buy shares or the maximum of assets of a targeted company in China. This is the most effective mode of market entry in terms of speed in marker entry. The organization can speedily access the resources and capabilities of the organization and utilize them for own competitive advantage. On the other hand, the organization can also quickly grab the China market, as it would get the exiting target marker of the acquired company. Moreover, the organization can overcome the market entry barrier easily through acquiring an already existing business. Furthermore, through acquisition, Card Factory can get the resources and capabilities of the acquired organization towards making the difference as the local needs. Moreover, the organization can also avail financial gain through acquisition in term of lesser needs of advertising and acquiring target customers.

Conclusion

While concluding study, it can be said Card Factory is going to enter in China Market with its outstanding gift cards. The organization is going to get stable political condition and growing economic condition of China, which can be highly favourable for the organization. The modest life style and gift giving manners of Chinese people can provide huge scope of this organization in China market. The organization uses EMV technology in personalizing the gift cards, which can be the special attraction in China market. Card Factory is going to face tough competition in China Market from China & Gift Mart and Alibaba. Furthermore, the organization can also face high threats of substitute products in China market in terms of digital gift apps and other mediums. Card Factory has the capability to produce products in lowest cost and therefore, it can offer products at low price. It can grab high market share in China market. On the other hand, the high quality and high level of expertise can create competitive advantage for the organization in China market. Moreover, the organization can also gain competitive advantage in China market through targeting the young and middle income group customers. The organization should apply transnational strategy in its international business and use acquisition mode in entering in China Market.

References

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