Brexit is the move by the British government to exit the European Union. This move will affect many international companies situated in the United Kingdom (Dhingra et al. 2016). As a result, most of the organisations in the United Kingdom are looking for other markets to venture into in case the deal affects their operation in the European market. Binatone is one of the United Kingdom companies that are worried by the Brexit move and as a result, its board has requested a management brief explaining the new market they can invest in to counter the effects of Brexit. According to Pollack (2015), a well created management brief can help organisations make perfect decisions in terms of investments and new ventures. The author narrates that, a management brief for the Board of Directors, must have specific goals it wants to achieve. On that note, the management report herein aims to evaluate a new market for Binatone so that it can invest in. The main aim of this brief is to provide the board of directors of Binatone with the best choice of market that can counter the effects of Brexit. According to Ebell and Warren (2016), for the brief to be of high quality, a marketing research must be conducted so that the company can make decision and choose the right market. The author notes that, marketing research can help an organisation understand the new competitors better.
The Product for the New Market
Binatone is an electronic company producing variety of products ranging from air conditioning fans, home appliances like gas cookers, fridges, and smartphones among others. Binatone management has chosen to expand the market for its smartphones. The management believes that the Brexit will affect its Smartphones’ market in Europe more than any other goods they have. Binatone smartphones can easily attract customers in the new market because of its numerous features. The product has high quality cameras which can be used by families to take photos. In today’s market, customers love phones with high quality front cameras (van Weelden et al. 2016). Binatone smartphones have been manufactured to satisfy the customers’ needs. The product can allow its customers to enjoy “selfy” moments with friends and families.
Internal and External analysis of the Company
Having knowledge on the environment a business is undertaking its activities on is so vital. According to Grant (2016), the understanding of the business environment can help its leaders to appropriately plan marketing strategies that can effectively win customers. For Binatone to successfully concur the new market, it must understand its insights including the customers’ preferences, competitors, political, social, cultural, and technological elements of the market. There are two types of environments that must be studied by a business before investing in a new market and they include the internal and external environments (Grant 2016). According to the author, the internal environment can be best analysed using the SWOT analysis while the external with the PESTEL analysis.
SWOT Analysis
SWOT analysis can help the organisation know its strengths and use them to outshine the competitors in the new market. Binatone is one of the leading electronic manufactures in the United Kingdom, however, the organisation must understand its strengths, weaknesses, opportunities available and threats in the new market. According to Phadermrod et al. (2016), the information on the above elements can be so significant in making decision when an organisation wants to venture into a new market. The authors argue that the strategy is normally used by business managers to determine the opportunities, strengths, weaknesses and threats that affect their firms. Below is the SWOT analysis of Binatone’s smartphone.
Strengths
The first strength of the Binatone smartphones is that they have been produced through high research to understand the preferences of its consumers. According to Bull et al. (2016), conducting market research before producing a product helps a company to understand the preferences of its customers thus, satisfying their wants. Binatone has used more than $14.67 in conducting research for its new smartphone product and market (Sayer and Morgan 2018). The figure below shows how the company toped in research and development.
Company
2017
2018
Binatone
$12. 78 million
$14. 67 million
Apple
$10.04 million
$11.58 million
Intel
$12.12 million
$13.08 million
Microsoft
$11. 98 million
$13.03 million
Amazon
$12.54 million
$22.62 million
LG Electronics
$2.18 million
$2.11 million
Figure 1 showing the amount of capital Binatone used in research and development (Sayer and Morgan 2018)
Second strength is that the Binatone smartphones have been designed with high level of innovation which suits the preferences of its consumers both in the United Kingdom and other markets the product is already selling. According to the company manager, the firm has received many awards due to its innovative strategies. Third, the firm has powerful marketing and manufacturing capacities and lastly, the organisation has good relationship with the American and Asian retailers.
Weaknesses
First, the firms’ key competitors in Asia are developing at a high rate and taking over Binatone’s smartphone markets. According to Lambini et al. (2016), the market share of Xiomi and Huawei grew by 29.4% and 48.1% respectively between 2014 and 2016. Secondly, some of the clients value other companies’ smartphones including Apple and Nokia more than those of Binatone. Third, the operating system of Binatone smartphones uses Android and most of the public does not like the system as much as the tech community like it. Lastly, its major competitor Apple has more sophisticated marketing strategies.
Opportunities
First, there is growing market for digitalised gadgets including smartphones in Africa and Asia especially India. Researches show that most customers in those regions are not that familiar with the smartphones (Eilu 2018). Second, the middle class in Asian and African regions is growing and this can increase the number of customers of Binatone smartphones. Third, the demand for smartphones has increased drastically in the developing countries and lastly, the market for amazon, Binatone largest retailer has increased tremendously across Asia and Africa.
Threats
First, the company’s major competitor Apple has covered more markets including the USA share. Second, the reputation of Apples is growing so much giving Binatone hard time to penetrate the markets. Third, the Brexit deal might jeopardise the company’s market in the European Nations and lastly, Xiaomi and Huawei possess threat to the markets of Binatone smartphones.
Market Selection
Before deciding to venture into a new market, a business must conduct a PESTEL analysis to observe if the market is conducive for its products. According to Grant (2016), SWOT analysis can also help company leaders see the opportunities in the new market. According to the SWOT analysis in the part above, the African and Asian especially the Indian markets can be suitable for Binatone to launch its sales to counter the challenges that Brexit deal will bring upon businesses in the United Kingdom. The company choses to venture into the African market especial Kenya due to the reasons in the macro environment analysis below.
PESTEL Analysis of Kenya for Binatone Smartphones
A PESTEL analysis is a theory used by marketing managers of various organisations to observe the external market environments that can impact their companies. According to Aithal (2016), the analysis can be used by marketing directors to analyse the new market they want to launch their operations. The PESTEL analysis herein has be used to determine the country which Binatone Smartphones will be launched for sales because it looks at all possible situations that can affect an organisation. The analysis has looked at the political, economic, technological, legal, environmental and social factors that can affect the operations of selling Binatone Smartphones in Kenya.
Political Factors
The political factors have significant impact of business growth. The impacts might either affect the business directlt or indirectly Aithal (2017). According to the author, the direct effects include the political relationship between countries. The author explains that, good connection between two countries can impact business operations positively and vice versa. The United Kingdom and the Kenyan government have had good trade and regulation relationships for a long time. This will affect the operations Binatone in selling its Binatone smartphones positively. The political environment of Kenya is stable and can allow Binatone to effectively market its product to the Kenyan people.
Economic Factors
The economic conditions of a country can affect business operations both indirectly and directly. The economy of Kenya can support the operations of Binatone. According to Bivolaru et al. (2017), the penetration level of mobile phones stands at 87% which means that if Binatone markets its product there, many people will buy the products. Researchers argue that the competition in the Kenyan Smartphones industry is high, however, there is still room for new investors in the field (Bivolaru et al. 2017). The middle class is increasing at a high rate and according to Binatone marketing manager, these are the potential customers of the firm. The figure below shows the growth of Kenyan economy.
Figure 2 showing the GPD growth of Kenya (Njogu 2018)
Social Factors
The Kenyan people like taking photos and “selfies” with their smartphones and post them either on Facebook, twitter, Instagram or any other internet platform (Song et al. 2017). They also use the phones to connect with their people here in the United Kingdom, US and other parts of the worlds. All these social aspects can only be fulfilled with smartphones with high quality cameras at affordable prices. The Binatone smartphones with satisfy all the social needs of Kenyans because it has been designed improve social culture in the society. The country also has relatively huge population of about 40 million people with whom 30% are youths (Njogu 2018). According to Binatone management the youths will be the potential clients of its products in the country.
Technological Factors
Kenya has improved a lot in terms of technology. According to Weiss and Weber (2016), the country has made tremendous changes in the technology sector for example, an online shop in the country known as Jumia has emerged due to the technological improvements. The technological literacy in the country will support the sales of Binatone Smartphones hence increasing its profits. The country is the host of one of the largest technological research centres in East Africa, UNESCO (Weiss and Weber 2016).
Environmental Factors
The environmental factors in the country can highly support the sustainability of Binatone products. Kenya does not suffer calamities like hurricane and Tsunamis however, there are some reports of floods in the country. The environmental risks present in the country cannot largely affect the sales operations of Binatone.
Legal Factors
Though Kenya has positive political, economic, environmental, and social factors on business operations, the legal factors in the country can affect the operations of Binatone there. The authorities mandated to regulate the Information technology sector in the country do not understand how the field runs. The government of Kenya has imposed high taxes on the manufactures of phones. According to Wawire (2018), the 8% VAT act in the country has affects all the business including the smartphones industry. However, Binatone can still profit despite the legal constrains.
Strategy and Mode of Entry into the New Market
There are numerous methods businesses can use to enter the new market. Businesses should chose the most appropriate strategy depending on their capital, international relations, the products to be sold and the nature of the new market’s environment (Bivolaru et al. 2017). Binatone will use three entry strategy models in shifts. First, the firm will apply partnership method in entering Kenyan market. Partnership is a process were two or more organisations sign an agreement to work together in exploring a particular market (Wawire 2018). The firm will partner with online stores in Kenya including Jumia so that the stores can sell the products on Binatone’s behalf. Partnership will help the company track sales and see if the people in the new market like the Binatone Smartphones.
Second, Binatone will employ direct exporting where it will work with agents on the ground to ensure that the products reach the intended customers. The company will employ agents who will represent Binatone in Kenya. Lastly, Binatone management will apply Greenfield Investments strategy if the sales in the first two strategies improve. This model requires a lot of capital to implement (Njogu 2018) thus, it will be considered only when the business is booming in the country. It will be implemented by buying a land and constructing Binatone’s Kenyan office. The office can be later used to penetrate other markets in Africa.
Barriers to Entry in the International Market
Barriers to entry are the factor that can challenge the decision of an organisation to venture into a new market. The barriers can include the start-up costs and other obstacles like legal challenges (Lambini et al. 2016). The management of Binatone must be prepared because the business will face various challenges when entering the Kenyan market. First, the Kenyan market has been overshadowed by the strong brands including Techno, Huawei, and Samsung (Njogu 2018). According to studies by Njogu (2018) and Wawire (2018), these three competitors hold about 46% of the market share. Binatone will require a sophisticated marketing strategies and team to concur the present strong competitive brands in the new market. The figure below shows the market share of the three brands and other smartphones companies in Kenya.
Figure 3 showing market share for major smartphone firms in Kenya (Wawire 2018)
Second, the Kenyan government influences the economy of the country on a larger percentage. This can affect the operations of Binatone in the country. Lastly, the frequent corruption issues facing the country and all of Africa can affect the entry of businesses in the in Kenya (Wawire 2018). Corruption can be a barrier to the establishment of Binatone’s business operations in the country. However, Binatone will develop strategies to overcome all these barriers so that it can successfully operate in Kenya. The strategy might include creating sophisticated advertsing models to market the products.
Conclusion
The Brexit deal that Teresa May signed will affect sales of many businesses in the United Kingdom depending on the markets at the European nations. The deal can make it hard for the United Kingdom firms to successfully operate in the other European countries due to poor political environment it will cause. Hence, this management brief has been written to research on the international market Binatone can invest on if the deal goes through and the effects seen. After analysing its internal environment using the SWOT analysis, the Binatone’s management will venture into Kenya. Kenya has been chosen because most of the factors analysed in the PESTEL analysis favour Binatone’s products. The country still has room for other firms selling smartphones to invest. The political environment of the country is also stable. Although, there are some barriers of entry, Binatone will generate strategies to concur the challenges. The three main entry strategies that Binatone will use to penetrate the international market include direct export, partnership, and Greenfield investment. In conclusion, Kenya can be a good alternative for the Binatone’s other European markets.
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