The report is based on the market entry strategies formed by the Wesfarmers; the company is an Australian conglomerate. In the competitive world, the competition in the business is continuously increasing and many companies are expanding their business across the borders to generate more of the revenue. To enter the across border company decided two countries to expand the business. The analysis of the macro environment, geographical risks, and opportunities, along with the market attractiveness is discussed in the report considering the selected countries.
The company came into the existence in the year 1914 as a Western Australian Farmers’ cooperative. The business operations of the company consist of supermarkets, liquor, hotels and convince stores. The company is the largest employer in the private sector with approximately 22,000 employees and has a shareholder base of 530,000. The major objective of the company is to deliver a satisfactory return to its shareholders (Wesfarmers, 2017). The company is having physical stores in Australia, Bangladesh, Ireland, New Zealand and UK. The company is having trade relationship across the world along with this company exports its product in Europe, Japan, South Asia, and North Asia. Now the company is looking forward to expand its physical department stores in other countries like Germany and Japan which is discussed in the report.
The countries selected for the analysis of the Germany and Japan, Germany is a western European country and Japan is sovereign island nation in East Asia. These are the two countries selected by the company for the expansion of the business. Germany has the largest population in the EU which is approximately 80.9 million. Along with the economy of Germany is largest in EU, GDP of the country is EUR 3.49 trillion along with that it registers the fourth place behind the US, China and Japan (Expatica, 2016). This also shows that Japan is having the 3rd largest economy across the world. Japan is the place where most of the people are educated and this is the reason that the literacy rate of the country is approximately 100%. The reason behind the selection of the countries is that the people of both the countries can easily spend the price on the products provided by the company (Facts About Japan, 2017). Both the countries are populated so the company can provide the diverse products and services through which they can earn maximum of the revenue.
Macro-environmental and geopolitical forces consist of the external and political factors that can create an impact on the working or decision making of the company in that country (Brinkman, Navarro, and Harper, 2014). Below given are the PEST factors that can create a positive and negative impact on the working of the company.
Germany is a democratic republic; the social democratic and Christian democratic union leads the political system since the year 1949. The constitution of the federal republic of Germany lays down the fundamental structure of the government. There are no political issues faced by the companies while expanding the business in Germany. The country promotes the foreign trade and the practices conducted by them.
Japan has a constitutional monarchy as its present form of the government. The country is facing the territorial disputes with Russia over the Kuril Islands, South Korea over lineout rocks. The disputes are taking place because of the control of marines and other natural resources. This might create an impact on the working of the Wesfarmers.
Economic factors
The availability of the raw material in the country is comparatively low that the other countries. The major resource that is available in the country is potash, lignite and the solar power technology. The service sector of the country contributes the maximum part of the GDP which is 70% approximately. The selected company is involved in the service sector so can easily contribute in the GDP of Germany by providing the employment to the people of the country (PESTLE Analysis, 2015).
The economy of Japan is 3rd largest in the world which is clear from the GDP of the country which is $ 4.884 trillion (nominal 2017). The growth in the GDP of the country is approximately 1.5%. This shows that the most of the people of the country have good purchasing power and they can spend the amount on the purchase of the products. Wesfarmers can take the advantage of this economy and can make good revenue (European Commission, 2017).
Socio-cultural factors
The population of Germany is largest among the other EU countries and the country is also known as the multicultural country, most of the people belong to the different culture. The society of the country is molded by the variety of lifestyles. The people of the country spend the amount on their lifestyle as they believe in modern lifestyle.
Japan consist of families belongs to the different countries. The reason being, the country grants full religious freedom, allowing minority that includes Sikhism, Islam, and Christianity. The education of the country plays a vital part in the economy and this is the reason Japan is rapidly growing and recovering. The company has opportunity to bring diversification in the country considering the demand of the customers (Saleem, 2017).
Technological factors
The country is an advance in the field of science and technology and this is the reason automobile sector is the strength of the country. The country comprises of the national and private research laboratories. The ministry of science and technology is an association who organizes and decided importance for the national technology and science programs in Germany. The company exit there can easily bring the innovation with the use of the advanced technology in the country (The Wall Street Journal, 2017).
Japan is an advance in the field of technology as the people make use of the internet, mobile phone and the automation. Maximum of the offices and the public places are mechanical in Japan. The company is well-known for involvement in the robotics field. The company can offer the products and services through online as the people of a country make use of these technologies.
ITC aims to support Germany in generating sustainable trade relationships with the other developing countries across the world. The country is the high-tech, and knowledge-driven powerhouse of the manufacturing and the exporting. The GTAI (Germany trade and invest) community members try to attract the investors (International Trade Center, 2017). The community conducts the activity to promote overseas trade and investment for promotion the country to the expected investors. The country consists of various institutions which include German Chambers of commerce abroad, overseas tasks and the Germany trade and invests (Federal Ministry for Economic Affairs and Energy, 2017). These all institutions work organized to deliver or provide the best potential backing for the German firms.
Japan’s ministry of the economy, trade, and industry are organized into numerous agencies and bureaus to articulate and implement a wide range of the industry and the trade policies. These trade policies might affect the business who are maintaining their business or companies who are going to open their business. The country has concluded 15 free trade agreements (FTAs) along with that the country also maintains the economic partnership agreements with other countries. The country is negotiating with the FTA-EPAs that include the EU and the Regional Comprehensive Economic Partnership (RCEP which consist of 10 ASEAN member countries along with the six countries which include China, Korea, India, Australia, New Zealand and the country itself) (Hong Kong Trade Development Council, 2017).
There are some of the potential dangers that are going to be faced by the selected company in Germany and Japan. Some of the potential dangers are discussed below: –
The country promotes the foreign investments and also promotes the foreign companies to start their business in Germany but this is the fact that whosever company will start a business have to fulfill the legal and political obligations. Similarly, with Japan, the country is forming the relationship with the other developing countries. The changes in the political and legal regulation might affect the company working and leads to the danger (Tsoury, Pnina, and Reinhartz-Berger, 2014). Wesfarmers might face the danger of changes in the strategy, as the company is going to establish the business in the other country so a company has to provide the services and products after analyzing the needs of the customers. Considering the needs the company will bring the changes in the strategy for Germany as well as for Japan. The company will face the danger of the success of the stagey in the countries or not.
It is recommended to the Wesfarmers to enter first in Germany, the reason being there is a presence of the good future growth and success of the company. The country is well-known for its population and economy. Though there is going to be a risk and competition among the businesses and this is also a fact that the service industry of the company is contributing approximately 70% this clearly shows the scope of the business in the country. Furthermore, the company can easily get the cheap labor in Germany, though this is the fact in Japan company will get the qualified labor but those labors are going to ask for high pay which is not possible for the company to pay such a high amount (Federal Ministry for Economic Affairs and Energy, 2017). This is initial time for the company so they can’t pay much amount as wages to the labor.
Conclusion
The report throws light on the market entry strategies formed by the company to enter the market. The report includes the selection of the countries considering the business and operations of the company. Furthermore, the report includes the external factors of each the country that can create an impact on the working of the company. The trade policies of each of the country are discussed in the report and along with that, there is an assessment of the potential dangers, risks, and opportunities in the current or short-term policies. Moreover, the report includes the recommendation of the country, Wesfarmers should expand the business in Germany as the company has an opportunity to make use of the advanced technology and to expand the business within the country.
References
Brinkman, J., Navarro, I. and Harper, D., 2014. Unlocking the business environment. Routledge.
European Commission, 2017, Countries and regions, viewed on 14th December 2017, https://ec.europa.eu/trade/policy/countries-and-regions/countries/japan/
Expatica, 2016, 30 interesting facts about Germany, viewed on 14th December 2017, https://www.expatica.com/de/about/30-facts-about-Germany_108768.html
Facts About Japan, 2017, Interesting Facts About Japan, viewed on 14th December 2017, https://www.facts-about-japan.com/interesting.html
Federal Ministry for Economic affairs and Energy, 2017, Facts about German foreign trade, viewed on 14th December 2017, https://www.bmwi.de/Redaktion/EN/Publikationen/facts-about-german-foreign-trade-2017.pdf?__blob=publicationFile&v=6
Federal Ministry for Economic affairs and Energy, 2017, Promotion of Foreign Trade and Investment, viewed on 14th December 2017, https://www.bmwi.de/Redaktion/EN/Dossier/promotion-of-foreign-trade-and-investment.html
Hong Kong Trade Development Council, 2017,Trade Regulations of Japan, viewed on 14th December 2017, https://hong-kong-economy-research.hktdc.com/business-news/article/Small-Business-Resources/Trade-Regulations-of-Japan/sbr/en/1/1X000000/1X006N03.htm
International Trade center, 2017, Germany, viewed on 14th December 2017, https://www.intracen.org/country/germany/
PESTLE Analysis, 2015, PEST Analysis for Germany, viewed on 14th December 2017, https://pestleanalysis.com/pest-analysis-for-germany/
Saleem, M.A., 2017. The impact of socio-economic factors on small business success. Geografia-Malaysian Journal of Society and Space, 8(1).
The Wall Street Journal, 2017, Foreign Investors Flock to Europe’s Economic Motor, viewed on 14th December 2017, https://online.wsj.com/ad/article/germany-economy.html
Tsoury, A., Pnina, S. and Reinhartz-Berger, I., 2014, September. Detecting, Assessing, and Mitigating Data Inaccuracy-Related Risks in Business Processes. In International Conference on Business Process Management(pp. 557-560). Springer, Cham.
Wesfarmers, 2017, Who we are, viewed on 14th December 2017, https://www.wesfarmers.com.au/who-we-are/who-we-are.
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