The Myanmar telecommunication sector has made a rapid change in their global expansion and also accumulatesnumbers of mobile companies to encourage the support of their infrastructural development. Some of the inland Myanmar mobile companies are doing their business in a success rate and this range like Telenor brand. This company has some franchised outlets also and they have new and latest handsets like T100M, T200M, T300M and all these handsets have glass screen with high-resolution camera in front and backside (Riasi, 2015). Vodafone is one of the strongest companies in Europe. They want to extend their business in Myanmar and in that case, at first, the company has to understand the internal market of Myanmar and what are the opportunities of this new company to extend their market. However, in thesector of telecommunication Vodafone is a unique name which is familiar in worldwide but as per the aspects of thehandset and mobile phones, the company has started to move on their business (Vodafone.co.uk, 2018).
There are strategic aspects and choice of functions that are important to understanding the market position of the nation. Myanmar shares the border with China, India, Bangladesh, Laos, and Thailand so the nation has apolitical and economic advantage due to deep sea ports. The prices of the handsets range from US$46 to US$1500. The range of mobile uses is extending in so efficient way that 70% of the rural people in Myanmar used mobiles for their daily works. Their business in Myanmar, Vodafone needs to understand some deriving factors that expected better growth in their business expansion (Fainshmidt, Smith & Judge, 2016). Through Porter’s Diamond analysis the opportunities in Myanmar market in mobile phone industry has discussed.
Porter’s Diamond model is a part of thestrategic analysis and strategic planning process. There are basically four segregations that impacted on the national economy. In case of Myanmar infrastructure, the range of product and services are thekey factor that holds the entire market and in case of penetrating a market there is some limitation and cautionary factors have in mind of the investing group.
At first, the importance of Factor condition has emerged in this section and the section covers the possible penetrating chances for Myanmar in case of extending business in mobile phones. Vodafone has a good networking system in global term but as they are focusing on their handsets so their business can improve a lot in Myanmar (Anton, 2015). There are some external factors that influence the business and as Chinese companies are making abetter strategic commitment in Myanmar and developing their business, European companies also put their step forward and come up for the challenges they made in case of doing business in Myanmar.
Myanmar government supports the ongoing business facilities in the nation and that is the reason most of the Myanmar mobile companies enhancing their territorial business. In that context, Vodafone is trying to enter the market and deliver thebest establishment in Myanmar market. The stable political factor is important for the product development (Byun, Lee & Kim, 2016). Myanmar government also moves their step forward to push Vodafone Company in their market. There are some regulatory reforms and that economic consultant that provide better chances for abusiness extension. Market assessment and land acquisition is another factor and government help is required for that reason.
In case of economic development, resource increase, inflation, interest rates, taxes and the amount of tax deduction is important to build their sustainable market position. Technological advancement can enhance the business market of any of the handset companies. As Vodafone have the knowledge in business, their executives will focus on the digital marketing rather than print promotion (Diamond et al., 2015). Vodafone knows the business extension policies and also set their target market and focusing on those sections only for the promotional aspect. If people know much about the company is coming with some stylish smartphones then they will go for these kinds of phones and that actually encourage the economy of Myanmar.
People attitude to new phones and trust over the company is the main aspectof this segment. There are some areas where people are unable to use the phone. Vodafone set their price at thevery low range and this is the second lowest price range that they have been set to grab the market. There are some big range handsets but most of the case the prices are proper as per the quality. US$46 is the starting range of their phone and so this is socially acclaimed by people also (Castro-Gonzáles, Peña-Vinces & Guillen, 2016). The phone has some default options like social platforms, navigation, tracker, waterproof facility, and solar recharge service. All these services attract more people and people can find the only option where these amounts of thefeature have given in so cheap price range. In case environmental, Myanmar environmental condition is the big issue and if theUKbring their people in for the stat up in business then they may not suite the weather at all, so local people investment is the effective step to consider (Wang, 2017).
In modern times, phones innovative quality and market revolution is only depending factor for technological enhancement and sustainable condition in Myanmar. Phones are more compact in recent times and lots of technological innovations come day by day so in this changing globalized situation, Vodafone has set their smartphone facilities like voice unlock, face unlock or trace the caller identity or the place of messaging also get know from these devices (Konsolas, 2017). Technological innovation creates the parameter of this globalized mobile phone market and Myanmar is also affected by this, people love innovation and them waiting for new features on their phone. A cope up strategy maintains the market position in all the time Vodafone telecom development researched on their innovation aspects.
Related and supporting industries basically empower the parental industry. In this situation, Vodafone is the parental company so factors basically enhance the productiveness of Vodafone and establish their ground in Myanmar. As per the report in Mizzima news, 6% extra use of mobile phone has been noticed in Myanmar and that is the reason they become the fourth fastest growing mobile center (Wonglimpiyarat, 2018). In case of handset user of their national brands, 80% of the mobile user of Myanmar uses their first handset. So a health business scenario has noticed in that section as the company delivers their phone at such low range and Myanmar government also help them to push their business in an effective way. There are some companies inter-related with this company like software and hardware companies in Myanmar, chip manufacturing companies, camera part or accessories companies, promotional companies, and all these resource generating companies are the main associate companies that enhance the business market of Vodafone (Deloitte.com, 2018). Software companies are developingin Myanmar and that help Vodafone to manage their business in a new place. Change in thedomestic market is first noticed by the company and that is the reason company enhancing their business opportunities and maintains the business at thenew range. As Vodafone believes in man-management and connects every people to build a better world tomorrow. They build a good partnership with cable investment and coordinate their business with the Gigabit society which is a broadband service of the nation (Jarungkitkul & Sukcharoensin, 2016). Connectivity, value for work, reward and loyalty and easy access to customer support is the main aspect for Vodafone. Vodafone addressing this thing in Myanmar also and they accumulate lots of technologically improved organization so that a better service value can be obtained.
There are lots of mobile companies those have agood market in Myanmar. In that case, Vodafone has to make an efficient penetration to get anentry in Myanmar. Telenor, Ooredoo, KDDI, SingTel, Viettel Group, Qatar Telecom, Sumitomo all these are significant mobile phone companies in Myanmar and they have to enhancetheir business market as there is no such good competitor in Myanmar market. There are some positive aspects of this existing company as they know the market a lot more than any penetrating company (Cho, Moon & Yin, 2016). But the promotional strength and the amount of expertise of market reading Vodafone has is quite enormous for any other mobile phone company (Byun, Lee & Kim, 2016). So, in case of rivalry they are alot more efficient from any other company. Their new phones are stylish and have such features that other companies cannot think of it at this price. The company explores the dimension of latest mobile phones. Their features are the main attraction for the company and that reflected in their production.
The foreign direct strategy is the adopting strategy for this company and this is the reason most of the investment has been done by their parental nation. UK Vodafone is the parental company and they try to expand their market in Myanmar through their mobile device,not their networking (Castro-Gonzáles, Peña-Vinces & Guillen, 2016). Myanmar government has given this opportunity to other business companies to operate their business in full-fledged. There are certain limitations in case of FDI, but Myanmar has given this opportunity to Vodafone to invest from their own. Vodafone will do their business in own way and no other companies are tied up with them and they are doing this business solely.
Business structure always has functional organization structure and that reflected in their business revenue and outcome. A proper structure like theinfluence of VP, HR, Admin and their legal counsel is there and this department following the human resource department. The organization also consist technological department and this department has different sections which will take care of quality, service and the relation with media and customer (Byun, Lee & Kim, 2016).
In a research, it has shown that 57% of Myanmar population aged between “15 – 65” used mobile phone. Almost 30% of them used mobile for the first time and that showcase better demand in Myanmar (Advancing Myanmar’s telecom infrastructure, 2018). Women also use mobile at high range and that showcases thebusiness need for the company. Vodafone has this pulling power to attract people and the brand has this trust and belief within people that they encourage the company to enhance their business limitation. A frequent model seen in the mobile phone industry is a transform in implementation motives as mobiles become more prevalent and people learn additional things about them. The Myanmar infrastructure is about to come in a period of speedy structural development as the government obtains to augment the number of themobilephones(Byun, Lee & Kim, 2016). It encourages and supports the expansion of mobile network communications across the nation. The emerging situation of the country also influenced the demanding nature of the country. This shows the percentage of people and their eagerness to use the mobile phones. Vodafone will also emerge the national economy of Myanmar and the demand curve of the nation is also suggesting the mobile-led underway for their development. In case of joint ventures there are certain of business breakdown devastation condition but in case solo business ventures that operated by Vodafone only so there is less risk in such situation(Castro-Gonzáles, Peña-Vinces & Guillen, 2016). The increasing demand shows better involvement and that enhances better demand and development in the mass market.
Business opportunity and the investment chances are reflected in all the factors and their related issues. These factors are somehow creating better chances for manage the business and state the possible reason to enrich the business also. There are some existing companies in mobile in Myanmar and their service and the networking is very useful for Myanmar people (Castro-Gonzáles, Peña-Vinces & Guillen, 2016). If Vodafone needs to survive their business in terms of accessing their market for all genres of people in Myanmar then the better investment and promotional strategy is the key factor they need to introduce in themarket so that people are getting interested about their products and they increase their business in an effective way. Chances are also applicable on supporting industries that means all the supporting industries try to enhance the position of the Vodafone mobile phone industry. In that sector, these resources are important and that provide enough demand in themarket. As per the promotional strategy is concerned, to reach out in more people and deliver agood amount of product for their business enhancement.
Government initiation is important and relevant for the development of business chances. There are some legal actions, land procedures, permission related matter and all these are important for the starting a business in any nation. Myanmar government supports any kind of business in that scenario. Foreign direct investment in that scenario is important as Myanmar government has given full opportunity to this sectionto foreign business(Odaka, 2015). Their import tax and duty taxes are less also and that enrich the progress path of business. Vodafone will take this chance and invest that money in case of promotion. In Myanmar, government support and acceleration will enhance the business opportunities and accumulate the factors that ensure better product quality for them to sustain in the market. In case of related business, the government also provides support to the associate business so that better demand and maker position of the company will stand strong.
FDI is a form of investment with controlling ownership in a firm in one country by an entity based in another country. The investment of the organization can be done through either buying a company inorganically in Target Company or expanding the work process operation in that country (Anyanwu, 2017). Foreign Direct Investment involves the direct ownership of a high degree of control in operation to grab the competitive environment. FDI involves a high level of resources and a high degree of commitment from the organization. An organization can expand its business through merger and acquisition, investment in a joint venture or the organization can construct the facilities to open a new business venture all by itself through investment (Blonigen & Piger, 2014). Some of the governments prohibit selling the goods produced in different countries; however, Vodafone is going to manufacture the products in Myanmar locally and it will also help to reduce the import duty and taxes. Import permits will not be needed and Vodafone can make a huge employment opportunity in Myanmar. As stated by Kasemsap (2017), making the direct investment can help to gain the services of skilled employees in the target market and it will also help to have the intelligence of the people. Vodafone will be more competitive in terms of selling the products at cheap prices with all desired features in mobiles.
Article 35 of Union of Myanmar declared that Myanmar would be following the market economy system and it started from 2011 (Myanmar-law-library.org, 2018). Myanmar is worthy of consideration in Foreign Direct Investment due to a large population and Myanmar has educated labour force and low wages. Myanmar has a strategic location and it has a good connection to sea and air links within European and Asian regions. Since late 1988, Myanmar government has been trying to engage the foreign direct investment (FDI) in Myanmar. The Government was trying to adopt a market-oriented system for resource allocation and the government was trying to encourage the private investment as well as entrepreneurial activities. The objectives of Myanmar Government and Foreign Investment Law (FIL) are related the Government of Myanmar opened up the foreign trade that includes promotions and expansion with the acquisition of high technology (Myanmar-law-library.org, 2018). The Government of Myanmar focused on developing the services and products that involve high capital and it created local employment opportunity. It is related to the regional development.
In Myanmar, foreign investors need to set up the business either in form of wholly foreign-owned or joint-venture with a partner. In case of the joint ventures, the foreign party needs to have a minimum share of 35% of total equity. The minimum amount for foreign capital is to be eligible under FIL (Foreign Investment Law), in case of industry, it is required US$ 500,000 and for a service organisation, it is required US$ 300,000 (Worldbank.org, 2018). Economic activities are allowed under the law of FIL in all sectors through notifying Myanmar Investment Commission.
Myanmar Government identified potential investment and significant opportunities for foreign investors. The government of Myanmar is trying to embark on privatisation of the companies in order to increase the FDI. In addition, as stated by Chan (2016), the legal system of Myanmar is the combination of English common law and customary law of Family. FIL in Myanmar provides the advantage of exemption of income tax for three consecutive years for Foreign Direct Investor and companies can take relief from the income tax of profit if they reinvested the money. The companies need to follow the right to pay foreign employees’ tax. In the year 2017, FDI in Myanmar telecommunication and transportation surged to almost US$ 3 billion and manufacturing companies are coming in Myanmar investing almost US$ 1.7 billion (Mmtimes.com, 2018).
The investors are governed by The Companies Act in locally as the application of trade permit needs to be given along with the registration number. Vodafone has to bear flat 30% of the tax rate in order to operate under the law of FIL (Odaka, 2015). Foreign currency is entitled to the company and net profit will be calculated after deducting all provisions and tax. The application procedure is complex as investors should give estimated annual net profit, recoupment period and prospects of creating employment and estimated annual foreign exchange rate. Investment laws in Myanmar are now in the watch-and-see stage on a policy of the new government.
Most of the large organisations are shifting their investment from developed countries to developing countries. Vodafone should sell its handsets to Myanmar market and it needs to establish its new office to Myanmar. It should not with the option of merger and acquisition or joint venture, Vodafone will establish its manufacturing centre and R&D in Myanmar. In foreign investment of Vodafone should be 100% that would allow the organisation to have a rebate in income tax. Vodafone needs to make the extensive investment to sell the handset and manufacture the products. Myanmar has been facing the issue of recent floods and scenario planning is necessary. MIC announced the investment policy that supports the government 12-point policy on the economy. Vodafone needs to research the market demand and takes the foreign direct investment through whole ownership of the company. In the initial stage, they can lend the towers of another company, in a later stage; Vodafone will make its own towers.
In international business, good communication is a very important factor. Communicating across various cultures is a challenge for management. Vodafone will hire employees from the local region of Myanmar for staffs’ posts. The senior-level posts will be given to the UK based employees. Therefore, there will be a cultural gap between two sets of employees. Cross-cultural competency will be resolved through the communication skills and core focus will be on developing communication gap. Effective communication to the stakeholders is needed in order to do international business (Prasad, 2015). Vodafone management will try to manage cross-cultural communication with their norms and values. The UK employees are open-minded in terms of professional contexts. Religion, faith,and beliefs of the employees are different and they need to work maintaining the workplace etiquette. Personal biases and cultural tradition can impact on employees’ behavior (Meyer & Thein, 2014). Management needs to solve the workplace cultural issue by providing diversity training to the employees and ensuring communication effectiveness. Most importantly, the employees within the organisation can communicate in different languages; however, English will be the communicative language. Vodafone will communicate in the English language with the employees and management will not be responsible for the hostile stereotype that creates barriers to communication. Behaviour difference will be another issue within Vodafone office and senior-experienced employees need to solve the issue. Management needs to solve the issue by displaying emotion based on the cultural background of the employees.
When an organisation goes to do business in a foreign land, the organisation needs to analyze the structure in gaining a comprehensive understanding of local laws. The new organisation needs to understand the tax implication through navigating legal requirement and the organisation needs to have ideas on trading laws. Vodafone management should have ideas on foreign investment in Myanmar and tax policies. The management may face the issue of regulation of telecommunication and mobile industry in setting the price and potential tariffs. Myanmar Parliament started the New Companies Law for making regulation of Foreign Companies. Under Myanmar’s Companies Act 1914, the organisations are classified into two types, Foreign Company and Myanmar Companies. Now foreign companies can have 35% of the ownership. In mobile manufacturing industries and telecommunication sector, the organisations can invest 100% and the government has abolished the permit to trade (Kinloch & Metge, 2014). Vodafone needs to register its name under New Companies Laws to carry the business in Myanmar. Vodafone needs to do some legal proceedings and maintains a bank account in order to lend the money. Management needs to secure the collection of debts as well as conducts an isolated transaction of money. Management will be new in Myanmar country and Vodafone needs to understand how they will recruit the employees. Vodafone can recruit the employees from the UK or they can recruit the employees from local sector. Vodafone needs to follow employment and labour requirements in Myanmar. Myanmar follows the guidelines of International Labour Organisation and Vodafone should follow the legal framework regulating the employment. Management of Vodafone may face the issue in the understanding of foreign laws and it may affect management information (Dosch & Sidhu, 2015). Vodafone needs to hire a legal advisor in order to stay updated with tax, employment,and investment laws. Myanmar has developed three zones to invest in a different way (zone 1, zone 2 and zone 3).
Conclusion
Mobile industry in Myanmar is flourishing as most of the companies are targeting the developing countries for expansion of the business. Myanmar government is committed to liberalizing the market aiming to overcome the barriers. In the first section, Porter’s Diamond model found the competitive advantage of Vodafone when they will enter as a mobile manufacturer in Myanmar market. In market competition, Vodafone will compete with Samsung, Huawei, Telenor,and MPT. Vodafone is a big name in the world market and they will enter the market with 100% FDI to establish R&D and manufacturing units. Vodafone may face the issue of foreign tax and legal issue in managerial section and they can also face the issue of cross-cultural management. This analysis highlights the overall competitiveness and investment attractiveness in Myanmar country for Vodafone.
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