Discuss about the Engineering Management International Business for Cyber Hacks.
Business proposals are formal documentation forwarded to the client or business managers for the future business relationships. The business proposals allow the client to collect information regarding the capabilities of the business so that they can be offered new contracts in the future. These proposals include the features, intent and the uniqueness of the business. The aim of this paper is to present a proposal for a business related to electronic products that will be traded with international clients based in another country.
The information and the data used in the paper have been collected from published journals and articles related to the business proposal and new product development.
The business proposes to enter the markets of UK and Australia due to the fact that the needs and the preferences of the customers of these markets match with the features of the digital products such as the virtual lock. The company proposes to enter the market using the direct export method in the initial phase of the business. There are a number of risks which can create a problem for the proposed product and the business as a whole. These involve the cyber hacks and unauthorised access.
The proposed business is going to produce digital app based door lock. This product of the company will also allow the customers to share the keys virtually with the family and friends through the internet. The product will be based on digital network and communication between the door lock, which needs to be placed in the door and the app which needs to be installed in the smartphone of the user. UK and Australia is the target market for the products of the company. The usefulness and the advantages of the proposed product fit perfectly with the cosmopolitan lifestyle and the needs of the customers of these markets.
Due to the advancement in the field of technology and networking between the digital devices, a lot of new virtual products have emerged in the market. This virtual lock or the other similar product is also a result of rapid advancement in the field of technology. [20] stated that the change in the technology is so rapid that products and their features also keep on changing with each advancement in technology. For example, the previous digital door lock products could operate through Bluetooth and therefore product only worked when the virtual key holder was near the Bluetooth connectivity range of the door lock. However, the current technology which is being used in most of the digital door lock products of the market includes Wi-Fi connectivity. Therefore, a virtual key holder can now control the digital lock from a distance apart using the internet [9]. The new products establish a connection with the home Wi-Fi so that it can be controlled by the virtual key holder through the app.
The current market for the proposed product of the company is moderately high due to the huge user base of smart devices. The current worth of the digital door lock market is 256 million USD. [1] Highlighted that, with the estimated increase in the number of smart phone users, the worth of the market is expected to increase further in the future. Currently, there are a small number of producers of the product in the market and none of them has been able to capture the market strongly. This is due to the fact that, compared to the number of smart phone and Wi-Fi users, the demand for the digital door lock is still significantly very low. [14] Pointed out that, digital platforms are yet to convince the customers that they can be used as a substitute for the physical products that they currently use. With the increase in the number of new generation customers who are comparatively more leaned towards technology, the demand for these products is expected to rise in the future. The product of this company has some extra features compared to the other products of the market and based on this the potential market share can be more than 35% in if unique strategies of the company work out well [10].
The proposed product will be traded between China and the destination markets such as UK and Australia. The proposed product and the benefit that can be derived from the product highly match the needs of the customers of these countries. The common characteristics between the chosen countries are that both of them are full of people following cosmopolitan culture. According to [5], people following a cosmopolitan culture tend to get attracted and become dependent on technology. This is also due to the fact that people belonging to this group have become busier due to globalisation and other economic amplifications throughout the world. Therefore, the features of the products are also influenced by the cultural characteristics and corresponding needs of the people of these countries. In addition to that, future upgrade of the products of the company will also take into account the features of the culture in order to meet the needs of the customers accurately. According to [12], the needs and the preferences of the customers are highly influenced by the lifestyle they live and the culture they belong to. Thus, the intended market for the product has been chosen such that it the features of the product fit perfectly given the needs and the preferences of the customers.
The UK is one of the largest and well developed economies having 5th place in the list of the largest national economy in the world. The economy of the country is mostly driven by the market operations, however, the intervention from the government and other authorities can also be seen in specific events. In terms of the purchasing power parity, the country is the ninth largest economy in the world. According to [4], the GDP of the country is 3.5% of the overall GDP of the world. The GDP of the country is 2.565 trillion USD and it is growing annually at the rate of 0.4%. The GDP growth rate of the economy fluctuates around the value of 0.5%. The service sector accounts for 80% of the GDP of the country [17]. Apart from that agriculture and financial service sector is also strong compared to the other countries of the world.
The bank of England is the central bank of the country which is responsible for regulating the interest rates, monitory and the financial policies of the country [13]. Currently, the interest rate of the country stands at 5% and the inflation is around 2.7%. Since the financial crisis in the year 2008, the interest rate of the country has been constant with no significant changes. The inflation in the country shows an increasing trend as the inflation has increased from 0% in the year 2010 to 2.5% in the year 2015. [11] Highlighted that the economy of the country is relatively risk-free compared to the other economies of Europe. This is due to the controlled financial and economic policies of the government that has been undertaken since the crises it survived in the year 2008. The high amount of working population and middle-class citizen of the country also makes it an attractive market for most of the international businesses of the world [18].
Australia is one of the largest mixed economies of the world with significant intervention from the side of the government. The GDP of the country is around 1.67 trillion as per the data of the year 2016. The country is currently enjoying an uninterrupted growth in the GDP of the country. The growth rate of the GDP has been constant since the year 2008 with slight short-term fluctuations [10]. The current growth rate of the country is around 0.6%. The most part of the economy is comprised of the service sector which accounts for 61% of the GDP of the country. This sector of the economy of Australia employs 79% of the overall labour force of the country [7].
The reserve bank of Australia is the central bank of the country that takes care of the monitory and the financial policies. The interest rates of the country stand at 1.5% which has dropped significantly since the year 2008 when it was around 6%. The inflation rate of the country has also gone down since the year 2008. It has dropped from 4.2% in the year 2008 to 1.8% in the year 2016. As per the trend of the country, the inflation after the year 2010 has been constant with some insignificant fluctuations around the constant level. [2] Stated the economy of the country has been mostly stable after the shock that it survived following the financial crisis of 2008. The dollar value of the Australian currency reached its peak in the year 2010. However, after that, the value of the currency has gone down with the time [15]. Similar to the characteristics of the economy of UK, the economy of Australia is also high in the number of the population working in the field of the service sector [22].
The necessary fund for the initial stages of the business will be collected from the owners of the proposed business. Apart from that, funds will also be collected from friends and families. Funds collected from friends and families will be collected as debts and therefore, none of the shares of the company will be provided to them. Furthermore, finance of the company can also be sourced from bank loans against collaterals. [21] Stated that the advantage of debt financing is that the control over the ownership remains intact. Apart from that, after a certain point of time, the company also has proposed to seek investment from angel investors as well. The angel investors will invest a moderate amount for the running of the company. In this case, the company will hand over few shares of the company based on the value of the company at that time and the amount of investment being made. According to [3], equity financing allows the owners of the business to attract a high amount of fund against the transfer of shares of the company.
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Strength |
Weakness |
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· The strength of the company is that it will have its own R&D unit and hence it will be easier for the company to adopt new technologies. · The emphasis of the company is on security and this will allow the company to increase customer base in the market creating its own USP. |
· The company is not aware of the behaviours of the customers and the other sellers of the market. · The lack available cases and studies of the market do not allow the company to gather information regarding the pattern of the market and the approach of the government. |
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Opportunity |
Threat |
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· The number of smartphone users is rising and hence there is an expectation that the demand for the virtual lock will go up in the future. · The working population in the intended market is growing and most of them are young professionals and hence potential customers of the market. |
· The other sellers have been operating for a long time and they have the better overview of the market. · Any kind of mishap from the side of any company can impact the demand for the product of this company as the industry is still very vulnerable. |
As part of the hedging strategies, the company will use a price fixing with the importer of the products of the company in the chosen organisation. This will allow the company to take benefit of a stable market price. This stability in the initial phase of the business will also allow the company to attract more funds for the future activities of the organisation.
There a number of risks associated with the proposal of the business. First and the foremost are the rapid changes in the technology. Dependency on the state of the technology increases the vulnerability of the company [8]. Apart from that, the industry is still in its experimental stage and hence any kind of mishaps from the products of any company can lead to a decrease in the demand for the products of the company and the industry as a whole. The most important threat that is associated with the proposed business is the unauthorised access and network hacks that can destroy the value of the products.
The foreign investment model will be selected for the business. Under this process, the company will transfer the manufactured product to the destination market. The company will produce in the home country which in this case is china and transfer the products through the direct exporting channels in the selected countries. It is also notable that, in the future with the rise in the demand of the product company will also be able use the economics of scale so that per unit cost of the products can be reduced.
The company proposes to enter the chosen market through direct export at its initial stages. The company will have its representatives who will be the face of the company in these markets. [6] Stated that, in the initial stages of businesses, direct exporting is the best tool to use as this is the cheapest option available to the companies. This will also allow the company to extract valuable market information through the representative as well. This information can further be used in the articulation of the future decisions and new products development. The company will export 14000 USD worth of products in both the countries. Depending on the sales and the preferences of the customers of the market, it will increase the export. After a point of time, the company will also change the method of market entry and select a licensing model in order to enter these markets [16]. The company proposes to enter the market in the next 6 months from the establishment of the company.
As per the finding of the paper, recommendations are given to the business owners regarding the security of the product. The owners of the company need to invest money to in order to increase the awareness of the customers of the market. Apart from that, anti-theft hack proof technologies can also be used with the help of third-party assistance as well. Another recommendation to the company is to select the representative of the company carefully in order to excel in the chosen market. The representative will be the face of the company in these markets and hence his behaviour and skills are important factors for the future performance of the company.
Conclusion
Thus, two of the chosen countries are UK and Australia, economic characteristics of which are mostly similar to each other. Due to the increase in the number of the young working population the proposed product of the company has the opportunity to successfully capture a part of the market. The company, as proposed in the report will start with a direct export method in order to enter the chosen market. There are a number of risks associated with the proposed business and the products. These needs to be the concern for the management of the company and it will help the company to establish a positive image among the customers regarding the products of the company.
Reference
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