AWSAYEL
Can you make a powerpoint presentation on “Internationalizing of a…
Can you make a powerpoint presentation on “Internationalizing of a local business in Bangladesh”. The report is below.
Executive Summary
The world is moving towardsinternational business everyday. The companiesare expanding their business outsideof their territories to gain maximumprofits or advantages in many sectors.Either they are sending their products to other countriesto engage in the international market, or they are producing their products in other countriesto gain maximum advantage of globalization. The main aim of this report is to show our ideas of how to engage the market in international business.
We explain the products we want to send to the international market. We look for a suitable countrywhere our businesscan be comfortable when it comes to generating profits,we look for strategies to develop for our productand finally we find the entry mode to finalizeour entry in the marketof choice. Our report is indeed full of depthof how we are planningeach move and decisions that we have taken.
Product Identification
Our country containsa variety of products which need internationalization. Being an agricultural and a resourceful country, the raw materials of many underrated emerging products are being produced. Not every product includes the attributes to be globally recognized and required. A product must reach the potential to match the quality of globally recognized product for internationalization. Thoughthe picking up a productfor the globalmarket is quite tough, we have selected a product which has the potential to gain a value worldwide and become profitable in international business.
Selected Product
The name of the product that we have chosen is ‘Bengal Eco Pen’. As the name suggests, eco refers to the environment. The raw materialsof our product are the waste of wheat, corn, and bamboo.Environment plays an important role in healthy living and the existence of life on planet earth. People depend on the environment for certain needs to sustainable life. Keeping environment as a concern, the pen is designed with biodegradable materials instead of plastic as plastic is non- biodegradable. Non-biodegradable materials are those that cannot be broken down by action of living organisms. As we know, pens are one of the most commonly used items, this unique ‘BengalEco Pen’ will have a great impact on the environment. Thousands of plastic pens are being used and discarded everyday worldwide. Plastic pens have a negative impact on the environment. Everyone has a duty to preserve the environment. People will value the product since it is our moral responsibility as humans to take care of the environment, and as a result, there will be a good demand for it on the international market. One of the key elements to bringing about a change that may make the world a better place to live is internationalizing particular product.
Country Selection and Evaluation
The ‘Bengal Eco Pen’ has great potential to the international market as it is environmentally friendly and also of the most demanded productsfor daily use. We cannotidentify a singlecountry which does not require pens as it is an essential product for any country. Usually, pens are made with plastic and other harmful material which are harmful for environment. As waste from corn and wheat, as well as bamboo, are the main components of our product, it may be a solution to that specific issue.
Selection of countries for the expansion of product have gone through several criteria, such as economic, socio and political aspects. Three countries are being selected for the comparison to internalization of our product, they are United States of America, India, and Malaysia.
United States of America
United States is one of the major nations which influences global market drastically. USA holds the world’shighest GDP in the worldhence the country’seconomy is in a stablecondition. There are enormous products which are dominating the USA market as emerging products. Still there are valid reasons why the USA is the correct country to internationalize our product.
The concept of ‘Eco Pen’ is already in the US market for a quite long time. There are many industries which are now manufacturing these kinds of products. People are also buying those as they are being offered an affordable price also. The population of US is around 340 million as of by now. Among the huge population, only 79% of the adults are literate in USA which reduced the usage of pen as an educational material. In terms of socio aspects, most of the people of USA are liberals, their liberal mentality sometimesoverlooks their responsibilities toward environment and people around them. Hence, people go for cheaper pens made with plastics rather than pen with eco-friendly materials. For example, During the covid pandemic, many US citizens refused to wear a mask because they thought that restriction of wearing mask harms their freedom.
Though USA offers FTAs (Free Trade Agreement), the list does not include Bangladesh. Despite the fact that, there is a decent tariff rate for the import of pens in USA which is 2.7% of the value of the product additionally 0.4 cent, the government system sometimes can be harsh for any trade depending on the globalpolitical situation. For example, the president of USA, Joseph Robinette
Biden has not withdrawn the Trump-era tariff who started a trade war against China, even including their allies. The tariff rate got raised and the global market got hampered. The above reasons can testify for not expanding the business in United states.
India
Being Asia’s one of the largest parliamentary democratic countries, India holds a strong position in the global market. The population of India is around 1.42 billion and a literacy rate of 77.7%. Though, around 18% people in India are illiterate, usage of pen is not overlooked in a country like India. But there are already competitors who are offering eco-friendly pens with an affordable price and a variety of collections such as ‘Seed Pen’. Those pens are locally made and distributed in many states of India.
The government and the people of India encourage nationalism, which helps their local economy by promoting homegrown goods. They don’t even attempt to boycott any goods that are incompatible with their nationalism. For instance, the Indian government banned Chinese products a few years ago due to political unrest. Their emotive behavior is inappropriate for any product that India is trying to absorb. Despite the fact that there are several initiatives and steps being taken to employ environmentally friendly items, local rivals are still well ahead of any worldwide product merchants.
Malaysia
Malaysia is situated in the Southeast Asia with a population of around 34 million. The adult literacy rate of Malaysia is mesmerizing which is around 95% and the young literacy rate is 96.78%.Malaysia also includes universities with world class education and students around the world come to study in Malaysia. Therefore, therewill be demandfor pens as educational materialnaturally.
In terms of economic condition, Malaysia is steady as the country exports raw materials like Rubber and Tin around the world. Being an upper middle-Income country, Malaysia’s development acceleration is decent.As the Eco Pen productis not introduced to the country in any decent manner, the product will have a great potential in the Malaysian market. Malaysia also imposes lower taxationon product export-import, which is one of the advantages of our ‘Eco Pen’ product.
Malaysian Government also preparing measurement to protect the environment and maintain the sustainability. The certain condition will assist our product to enter the local market of Malaysia and will also be appreciated by the government. Because of the higher literacy rate, the spread of awareness among educated young people will be easier which will help the sales strategy of the product. The socio aspect is being reflected in the above criteria. Moreover,Malaysia owns the fourth largest economy in ASEAM and remains sincere to global investment which certifies that Malaysia has political stability. Malaysia also thinkingof FTA agreement with Bangladesh which will be a great advantage for future trade.All the circumstances demonstrate an optimistic view to internationalize our product. Now, the question is “Why will they choose Bangladesh as their importer”. The clarification is given below.
Why From Bangladesh?
Bangladesh grows about 30 various species of bamboo. Though China holds the first position in terms of producing bamboo,Bangladesh owns a larger part in the Southeast Asia. Moreover, mostof the China’s bamboo productions are consumed by Pandas. Bangladesh also produces a greater amount of wheat and corn. In 2023, Bangladesh’s production for wheat as 1.1 million tons and 4.8 million tons in terms of corns. These raw materials are being used for the eco pen. Additionally, labor cost in Bangladesh is also lower than any many other countries. Hence, it will help to reduce the cost of the product. Moreover, Bangladesh and Malaysia are concluding to do FTA (Free Trade Agreement) recentlywhich can be a great advantage for both countries in future trade.The above reasons reflect that, the particular ‘Bengal Eco Pen’ from Bangladesh will be a great choice for Malaysia.
Strategy of Internationalization
In the world of international business, one firm has to move outside of their territory and make their business profitable in the host country. For this reason, the decision making of the firm is necessary in order to become successful in international trade. In order to do that the firm must choose international strategies. There are many strategies to follow in order to get the best results and the strategydepends on the product or the serviceas well. As it showsthe local responsiveness and if the firm needs to cut the cost of production.
In our case we would like to show our products as eco-friendly products in the market. As we are producing a pen that is made of paper to reduce plastic waste. The country Malaysia however suffers from plastic waste. The behavior of Malaysian people towards plastic waste is pretty responsive. Which lets us think that the “Eco pen” will be a new favorite of the country’s people who love the environment. Our strategy is toexport the products directly to theretailers and hand the responsibility to them to do their sells. In order to choose the best strategy to sell the product in the host country, we need to know the pressure for cost reduction and the pressure for local responsiveness as well. As Malaysia is 7th in the literacy rate of 10 most South Asian countries, the country’s people take the study seriously. Which is why there is a great market for pens in the country of Malaysia. However,as the country’s peopleare responsive to plastic waste,we believe that this will not be a challenge for us to be in the market for students and office users. The firm will face pressurefor cost reduction to be in the marketas the product has many competitors in the market, and the product will face low pressure from local responsiveness. The value for the product will be created as the product focuses on an eco-friendly environment. We will also use the low-cost strategy to produce the product and be in the market.
The most suitable strategy for the productis Global standardization. The reason this strategy is best for the market is because we will increase the growth of profit and ability of profitable options by taking advantage of cutting the cost from the location economics and economics of scale. The strategy is used for high-costreduction responsiveness and low pressuresfor local responsiveness. The country Malaysia is extremely responsive towards the products that are a need in their daily lives to study and office use. The countrypeople tend to have an attraction towardslow price penswhich is explainable by the look of theirliteracy rate. Our target market is going to be the studentsand office workers where we can see the people are looking for the most affordable pen. The age of the consumers here are not a matter of concern as we will be making our product for people of every age. The country people are expected to love the new step of changing the country as they are facing plastic wastes.
As we look into this matter it is fully clear that we will face the pressure for high-cost reduction. The countryMalaysia already has many pen companies that are dominating the market. However,it is not going to be a problem as the home country will not face any problem when the cost is reduced to make the product. The product manufacturing cost will be 5.08tkafter cutting the cost
and including the export tax of Bangladesh. It is possibleto make a profit of 10.92tk after exporting the product. Moreover, this will cover the remanufacturing cost.
However, the pressurefor local responsiveness is very low as the people of Malaysiaare not very responsive towards eco-friendly pens that are existing in their country, but the country people are taking steps in other sectors to reduce their plastic waste. Which is why this is a new sector for them as they are used to using pens which are not eco-friendly. Nevertheless, we are hopeful in this sector for our steps in making the country use eco-friendly products in their daily use.
Last but not least, this strategy is best suited for the product. The people of Malaysia are responsive to their plastic waste and the country’s environmentalists are concerned about it. The cost-cutting strategy is going to be our key optionto earn profit as well as win the minds of our target customers.
Appropriate EntryMode
When a business entity sells their goods and services in a foreign market, the method in which they expand their business internationally is known as the Entry Mode. There are multiple entry modes such as exporting, licensing, franchising, jointventures, and whollyowned subsidiaries.
The entry mode that best suited our product is exporting, in specific indirect exporting. Through indirect exporting we will sell our Eco Pen to intermediaries who will then sell your products directly to customers or retailers. This will be a small-scale entry into Malaysia’s market which will benefit us as we will be able to enter the market while limiting our exposure and risks.
Factors that were considered while choosing our mode of entry were the trade barriers, economic and political risks,transport and othercosts, and firm strategies. Bangladesh and Malaysia are soon to have very little to no trade barriers between each other as the capital of the two countries may sign a Free Trade Agreement (FTA). Thus, creating an open entryway for our product “Eco Pen” to enter into the Malaysian market through exports. Malaysia’s economic growth is expected to grow along with their GDP in upcoming years causing their economy to be stable for trading. Furthermore, Malaysiais in the top 100 countries in the politicalstability index, which further
reduces the risk of facingdifficulties in terms of rules and regulations while exporting our products there.
Entering the market through exports allows us to avoid large costs of setting up manufacturing operations in Malaysia which we would have faced if we chose to have a wholly owned subsidiary or a joint venture. Furthermore, we will be able to achieve location economies and economies of scale along with achieving the most cost-effective level of the experience curveby producing only in Bangladesh. The total cost of each pen we produce will be 5.08Tk including export tax. The products will have a FOB shipping point, meaning the buyers of our product will bear the transportation costs. The lack of trade barriers and transportation costsmake exporting the superior choice of entry compared to FDI. Hence, if we sell our Eco Pen to Malaysian intermediaries at 16Tk per pen, or roughlyRM0.78 (Malaysian Ringgit)then we will be making a profitof 10.92Tk per pen. This brings us in competition with other pen sellers in Malaysia, whilst also giving us a competitive edge in termsof pricing and being an eco-friendly product.We will avail a competitive edge in terms of priceas the affordable pens are sold to consumers at a priceof RM1.5 in Malaysia. Thus,our intermediaries will also be able to make a profit of RM0.72 maximumif they sell at the same price as their competitors. It is pertinent to have a low price for our Eco Pen when exportingit as we will be able to reach a wider customer base in Malaysia. People of all ages and socio- economic status will be able to afford our pen. Havinga competitive edge in thesetwo aspects are the strategies our firm will benefit from.
There is an absence of control that is faced when licensing a product which has the ability of damaging our potential of successfully enteringthe foreign market.With licensing we will becomedependent on the skills, resources, and abilities of the licensee to generate revenues and pay us a royalty fee. Although, with exporting we will not be dependent on our intermediaries to generate revenue. The absence of control is damaging since one of our main competitive edges of the product is that it’s eco-friendly. Therefore, if our Eco Pen is not advertised properly in Malaysia for being eco-friendly by the licensee, then consumers may not feel the necessity to purchase our pen. Which will then causeour licensees to stop sellingour pens to their countryas they are unable to make profits.Although franchising our Eco Pen instead of licensing could mitigate the potential of losing this competitive edge, it is also flawed in the sense that our geographical distance and locationsmay hinder us from havingproper control over these aspectsof their businesseven if we
have the right to control it. Which would then result in similar consequences of licensing our Eco Pen.
Overall, considering all the factors mentioned above, exporting our Eco Pen indirectly seems to be the best option for our companyto maximize its profits from the foreign market.
Discussion and Findings
The study, analysis, and findings for our entrance into the worldwide business are presented in the report. Malaysia and the “Eco Pen” product are our choices, respectively. Our eco-friendly product is well supported by the eco-friendly approach made toward a nation with a high plastic waste rate. The level of literacy in the nation demonstrates the importance of school-related stationery items, which makes it easier for a product to compete. As the low-cost strategy makes the product accessible to every consumer we have targeted, the global standardized plan aids the product’s survival in the marketplace. Lastly the entry mode for our product is Exporting, which helps the product to face less tariffs and makes it easy for both the home and host country to be engaged in the trade. The result in the end is estimated to be positive as we have taken necessary steps to beengaged in the trade.
