Final mark awarded:_____

FACULTY OF BUSINESS AND

SOCIETY
Assessment Cover Sheet and Feedback Form 2014/15
Module Code:
Module Title:
ER3S72
Global Business
Assessment Title and Tasks:
Business Report
No. of pages submitted in total including this page:

Module Lecturer:
Gabor Horvath
Assessment No.
1
Word Count of submission

23

Date Set:

(if applicable): 3050

Submission Date:
07 January 2015

Return Date:

Part A: Record of Submission (to be completed by Student)

Extenuating Circumstances
If there are any exceptional circumstances that may have affected your ability to
undertake or submit this assignment, make sure you contact the Advice Centre on your
campus prior to your submission deadline.
Fit to sit policy:
The University operates a fit to sit policy whereby you, in submitting or presenting
yourself for an assessment, are declaring that you are fit to sit the assessment. You
cannot subsequently claim that your performance in this assessment was affected by
extenuating factors.
Plagiarism and Unfair Practice Declaration:
By submitting this assessment, you declare that it is your own work and that the sources
of information and material you have used (including the internet) have been fully
identified and properly acknowledged as required1. Additionally, the work presented has
not been submitted for any other assessment. You also understand that the Faculty
reserves the right to investigate allegations of plagiarism or unfair practice which, if
proven, could result in a fail in this assessment and may affect your progress.
Details of Submission:
Note that all work handed in after the submission date and within 5 working days will be
capped at 40%2. No marks will be awarded if the assessment is submitted after the late
submission date unless extenuating circumstances are applied for and accepted (Advice
Shop to be consulted).
You are required to acknowledge that
you have read the above statements
by writing your student number (s) in
the box:

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14050323

IT IS YOUR RESPONSIBILITY TO KEEP A RECORD OF ALL WORK SUBMITTED

1
2

University Academic Integrity Regulations

Information on exclusions to this rule is available from Campus Advice Shops

14050323

Assignment 1 Global Business

ER3S72

Part B: Marking and Assessment

(to be completed by Module Lecturer)
This assignment will be marked out of 100%
This assignment contributes to 50% of the total module marks.
This assignment is bonded / non- bonded. Details :

Assessment Task:
Please see Blackboard.

Learning Outcomes to be assessed (as specified in the validated module descriptor

http://icis.glam.ac.uk):
Demonstrate an understanding and ability to critically analyse, evaluate and appraise the key internal and
external contexts in which global business operates, and the ways in global business reacts to those contexts
and changes in them in terms of comparison, evaluation, and subsequent strategy integration, synthesis,
formulation and validation

Grading Criteria:
Marks available
The rubric to be used in marking the assignment will be as follows :-

Criteria:
Discussion-Content
Discussion -depth of research
Data included
Literature
Applied data presented
Theory presented
Practicality - Understanding of
issues
Structure of Assignment
Originality of recommendations
Presentation

practical

% of Total Marks for that criteria

10%
10%
10%
10%
10%
10%
10%
10%
10%
10%

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Assignment 1 Global Business

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Feedback/feed-forward (linked to assessment criteria):

Areas where you have done well:

Feedback comments will be provided through GradeMark for work submitted online

Feedback from this assessment to help you to improve future assessments:

Other comments

Mark:

Markers Signature:

Date:

Work on this module has been marked, double marked/moderated in

line with USW procedures.

Provisional mark only: subject to change and/or confirmation by the Assessment Board

Page 3 of 23

14050323

Assignment 1 Global Business

ER3S72

Part C: Reflections on Assessment

(to be completed by student optional)
Use of previous feedback:
In this assessment, I have taken/took note of the following points in feedback on
previous work:

Please indicate which of the following you feel/felt applies/applied to your

submitted work
A reasonable attempt. I could have developed some of the
sections further.
A good attempt, displaying my understanding and learning, with
analysis in some parts.
A very good attempt. The work demonstrates my clear
understanding of the learning supported by relevant literature
and scholarly work with good analysis and evaluation.
An excellent attempt, with clear application of literature and
scholarly work, demonstrating significant analysis and evaluation.
What I found most difficult
about this assessment:

The areas where I would

value/would have valued
feedback:

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Table of Contents
LIST OF TABLES ....................................................................................................... 6
I.

Introduction ........................................................................................................ 7

II.

Global Trends STEEP Analysis...................................................................... 8

III. Situational Analysis ........................................................................................... 9

3.1.

Potential Countries ..................................................................................... 9

3.1.1.

Vietnam ................................................................................................. 9

3.1.2.

China ..................................................................................................... 9

3.1.3.

Pakistan................................................................................................. 9

3.2.

Data Analysis .............................................................................................. 9

3.2.1.

Internal Environment (SWOT) .............................................................. 10

3.2.2.

External Environment (PEST) .............................................................. 10

3.3.

Findings and Summary ............................................................................ 16

IV. Internationalization and Choosing Mode of Entry ......................................... 16

V.

Conclusion ....................................................................................................... 19

References .............................................................................................................. 20

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LIST OF TABLES
Figure 1: STEEP Analysis for Elecdyne ............................................................................... 8
Figure 2: Internal Environment of Elecdyne ....................................................................... 10
Figure 3: Table of Weights ................................................................................................. 11
Figure 4: External Factors - Political .................................................................................. 12
Figure 5: External Factors - Economic (Cost-related) ........................................................ 12
Figure 6: External Factors - Economic (Market-related) .................................................... 13
Figure 7: External Factors - Socio-Cultural ........................................................................ 14
Figure 8: External Factors - Technological ........................................................................ 15
Figure 9: Final Scoring ....................................................................................................... 16
Figure 10: FDI Choices Greenfield ................................................................................. 17
Figure 11: FDI Choices - Joint Venture .............................................................................. 18
Figure 12: FDI Choices - Merger ....................................................................................... 18

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I.

Assignment 1 Global Business

ER3S72

Introduction

Elecdyne, a Japanese company founded in 1990, specializes in electronic products

but has been on a struggling type of situation due to the complete reliance on
domestic market and called for an effective strategy to help it turn around from the
crisis it has been experiencing.
The Elecdynes management team had a discussion on measures which they can be
able to overcome the current difficulty while still achieving strategic objectives of
reducing costs, gaining access to technological expertise, and expanding their
market, thus a plan to go global has been made.
This report will aim to evaluate the current issues and global trends which is likely to
affect Elecdyne by using STEEP table framework, and critically analyze the
internationalizing strategy towards three most attainable destinations including China,
Pakistan, and Vietnam.
In order to gain an indeepth understanding of those countries to be able to compare
with Japan, this report will conduct a comprehensive analysis of the business
environment within the countries stated using SWOT framework for internal factors
and PEST weighted analysis for external ones. These frameworks allow the company
to evaluate the competitive advantages and disadvantages involved in the global
context.
At the end of this report, it will come up with the best destination for Elecdyne and
combine with chosen entry mode of FDI which is most suitable for the company to
implement their internationalizing strategy, thus give an eventual conclusion and
recommendation.

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Assignment 1 Global Business

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II.

ER3S72

Global Trends STEEP Analysis

It is important for Elecdyne to examine those current issues as well as potential

trends that they may face when going global. A STEEP framework provides a wide
overview to consider how the macro-environment might change (Henry, 2013). It
highlights five key factors including social, technological, economic, environmental,
and political, which clearly determine a broad view for Elecdyne to make optimum
decisions.
Current Issues and Global
Trends

Social

Users tend to move niche networks to

recover the intelligence and community
1
feel to social interactions
Content marketing is an optimum
3
alternative for traditional marketing

Aging population is increasing rapidly in

4
emerging economies

Technological

3D and 4D printing use technology

born of paper printing to make actual
1
physical objects
Connectivity, time scarcity, the internet
of things, and mobile payments, are
1
changing shopping behaviors
Cloud service adoption across the
9
enterprise is a growing reality

Economic

The locus of economic activities are

being shifted by the economic growth of
2
China and other emerging countries
The rapid fall in world petroleum prices
leads to both positive and negative
5
sides
10
Increasing network organizations

Crowdfunding moves towards the

10
mainstream
Demand for natural resources outpaces
2
supply.

Environmental

Political

Customers are more likely to choose

8
environmentally-friendly products
Conflicting between citizens and their
governments, policies, well presented
in the Middle East, South Africa, and
7
Central Asia.
Policy reform including eco-taxes,
technology-specific incentives, or laws
6
on recycling due to climate change.

Recommendations for Elecdyne

Improving customers interaction to get
a competitive advantage via social
media.
Generating and allocating relevant,
valuable, and consistent content to
attract and acquire a clearly defined
audience
Elecdyne should consider the shifts in
tastes and preferences of electronic
products due to aging
There is certainly a good investment to
consider especially in printing-related
products.
Elecdyne could satisfy demands for
immediacy and surprise by offering
personalized service, integrated offline
and online value propositions.
Accumulating personal clouds and
external private cloud services is an
imperative in customer interaction
Emerging economies are potential
internationalizing destinations
Elecdyne needs to evaluate the impact
of lower prices to see if they are energy
winner or loser.
Exploiting collaborative technologies to
increase their use of partnering,
independent workers, and outsourced
service.
Elecdyne should consider using this
method to finance their business.
Elecdyne should invest more on
apparatus that could help in minimizing
the dependence on natural resources
Focusing on environmentally-friendly
products becomes important.
Avoiding these regions in choosing
internationalizing countries

Seeking specific opportunities in

renewable energy assets or developing
new technologies.

Figure 1: STEEP Analysis for Elecdyne

1.
2.
3.
4.

Stoklund (2014);
CECP (2014);
Bagley (2014);
Badkar (2014);

5.
6.
7.
8.

Globalissues.org (2014);
Greenrhinoenergy.com (2014);
Mancini (2014);
Green Business (2013);

Page 8 of 23

9. Itbusinessedge.com (2014);
10. Smallbizlabs.com (2014)

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III. Situational Analysis

3.1.

Potential Countries

3.1.1. Vietnam
The country has been securing social-political stability.
Positive economic prospects in terms of growth.
Cheap, young and more and more technologically qualified laborers.
Based on the free market, the government committed to creating an
attractive and fair business environment for oversea investors, and to
introducing economic reforms.
(Dung, 2014)
3.1.2. China
Witha wealth of manpower, a strong potential, and potential partners eager
to learn and develope, China is an appropriate country for low cost
manufacturing.
A rapidly growing market, which was not excessively influenced by the
financial crisis.
(Santander Trade, 2014)
3.1.3. Pakistan
A potentially large market with a population of 196 million people and
significant natural wealth.
The positive GDP growth in recent years highlighted by the development in
industrial and service sectors.
Higher purchasing power due to a decrease of the poverty level by 10%.
Development spending has been raised in the past few years, including a
50% budget allocated for development.
The government has made efforts in introducing more FDI attraction

policies and economic reform.

(Santander Trade, 2014)

3.2.

Data Analysis

In order to achieve specific strategic objectives, its important for Elecdyne to address

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ER3S72

both the internal and external environment. This could help Elecdyne to craft
innovative strategies to leverage internal strengths and take advantage of external
opportunities. (Johnson et al., 2013)
3.2.1. Internal Environment (SWOT)
When it comes to internal environment, the SWOT framework is extremely useful for
understanding a companys Strengths and Weaknesses, and for identifying both the
Opportunities open to them and the Threats they face. This could help in reviewing
strategy, position and direction of a company or business proposition.
(Businessballs.com, 2014)
STRENGTHS

WEAKNESSES

Experienced people
International education background
English speaking managers
Respectable
Japanese
personalities
Experienced in the industry
More flexible when enter a new
market
Good reputation in Japan

Lack of abroad working experience

Extra costs on working abroad

Wide range of products

Good quality of products

Relies on large multinationals in

licensed technology, depends on
local suppliers
Lack of innovation

People

Operations

Resources

Losing cost control

Lack of international experience

Figure 2: Internal Environment of Elecdyne

3.2.2. External Environment (PEST)

Changes in external business environment can both create opportunities and pose
threats for organizations. PEST Analysis is a widely used and simple framework that
allows companies to examine changes in their business environment in terms of
Political, Economic, Socio-Cultural, and Technological aspects. This framework helps
in understanding the "big picture" forces of change that Elecdyne is exposed to, and
from it, getting benefits of the existing opportunities.
(Mindtools.com, 2014)
The table of weights presents how important each factor is to Elecdynes strategy.
Economic factors are regarded as most significant importance because the company
focuses on cost reductions, and expand new markets. And technological and political
factors are also important afterwards since its effect on access to technological
expertise and ease of establishing and managing an international company. Lastly,
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the socio-cultural factors are weighted with minor importance, due to less relevant
validity of sociological aspects of the company.
Factor

Multiplier

Political

1-7

Economic Cost

1-10

Economic Market

1-10

Socio-Cultural

1-5

Technological

1-7
Figure 3: Table of Weights

In order to compare the countries, every index within each factor will be ranged
between +/-10, which are illustrated as better/worse than Japan. Those figures will be
multiplied with the weights of each factor as above discussion.
POLITICAL

JAPAN

CHINA

PAKISTAN

VIETNAM

76

64

48

50

(-3)*2=-6

(-4)*2=-8

(-4)*2=-8

3.8

4.8

7.8

4.3

(-2)*2=-4

(-4)*2=-8

(-1)*2=-2

74

40

28

31

(-1)*4=-4

(-2.5)*4=-10

(-2)*4=-8

35.64

25

34

22

(6)*6=36

(1)*6=6

(8)*6=48

29

90

128

78

(-4)*3=-12

(-6)*3=-18

(-2)*3=-6

25

50

100

50

(-2)*6=-12

(-4)*6=-24

(-1)*6=-12

23

33

21

34

(-4)*6=-24

(3)*6=18

(-4)*6=-24

Legal Weekly Duration (hours)

40

40

48

48

*7

(3)*7=21

(3)*7=21

3.5

4.1

3.1

3.1

Transparency of government
7
policymaking
*2
Political Instability Index

*2
Corruption Perception Index

*4
2

Corporate Tax Rates (%)

*6
Ease of Doing Business Index
(1=most business-friendly
regulations)

*3
Overtime Payment on regular
4
days (%)
*6
Time of Business Setup
3
Procedures (days)
*6
3

Burden of Government
7
Regulation
(1=highly burdensome, 7=not
burdensome)

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Assignment 1 Global Business

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*5

ER3S72

(4)*5=20

(-1)*5=-5

(-1)*5=-5

7.8

5.5

4.3

4.8

*5

(-3)*5=-15

(-5)*5=-25

(-4)*5=-20

TOTAL

-21/10=-2.1

-53/10=-5.3

-16/10=-1.6

The International Property

8
Rights Index

Figure 4: External Factors Political

1. World Bank (2014);
2. KPMG (2014);
3. Santander Trade (2014);
4. Paycheck (2014);
5. Transparency International (2014);
6. Views Wire (2010);
7. World Economic Forum (2014);
8. IPRI (2014)

ECONOMIC (COST-RELATED)

JAPAN

CHINA

PAKISTAN

VIETNAM

5.64

1.73

1.23

0.56

(4)*10=40

(5)*10=50

(7)*10=70

-0.6

1.7

7.5

4.8

(-1)*3=-3

(-3)*3=-9

(-2)*3=-6

17

24

20

77

(3)*8=24

(2)*8=16

(7)*8=56

1732

111716

858

8368

(10)*5=50

(-1)*5=-5

(5)*5=25

8.3

28.09

13.76

19.10

(-5)*6=-30

(-2)*6=-12

(-3)*6=-18

96.69

52.64

31.47

44.2

*7

(-2)*7=-14

(-4)*7=-28

(-3)*7=-21

38,634

6,807

1,275

1,911

*2

(-2)*2=-4

(-4)*2=-8

(-3)*2=-6

TOTAL

63/7=9

4/7=0.6

100/7=14.3

Minimum Hourly Wage (US$)

*10
4

Inflation Rate

*3
Imports of Goods And
4
Services (% GDP)
*8
FDI Flows in the Host
3
Economy (Millions of US$)
*5

Property Prices Index (%

Income)
*6
Customer Price Index

GDP Per Capita (US$)

Figure 5: External Factors - Economic (Cost-related)

1. National Master (2012);
2. Numbeo (2014);
3. UNCTAD (2012);
4. World Bank (2014)

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Assignment 1 Global Business

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ECONOMIC (MARKETRELATED)

ER3S72

JAPAN

CHINA

PAKISTAN

VIETNAM

4.3

4.5

5.1

(3)*6=18

(5)*6=30

(-1)*6=-6

72.4

52.5

55.2

50.8

(-1)*3=-3

(-1)*3=-3

(-1)*3=-3

0.8

8.2

4.3

5.6

(7)*3=21

(5)*3=15

(6)*3=18

1.98

0.41

0.48

0.4

(-1)*6=-6

(-1)*6=-6

(-1)*6=-6

51

58

33

57

(7)*4=28

(-2)*4=-4

(7)*4=28

1732

111716

858

8368

(10)*5=50

(-1)*5=-5

(5)*5=25

3.64

3.04

2.73

2.83

*7

(-1)*7=-7

(-3)*7=-21

(-2)*7=-14

TOTAL

101/7=14.4

6/7=0.9

42/7=6

Unemployment Rate (%)

*6
Economic Freedom Index

*3
GDP Avg. Growth Rate in
5
recent 3 years (%)
*3
Affordability Index

*6
5

Labor Force Rate (%

Population)
*4
FDI Flows in the Host
4
Economy
*5
1

Big Mac Index (US$)

Figure 6: External Factors - Economic (Market-related)

1. The Economist (2013)
2. Heritage Foundation (2014);
3. Numbeo.com (2014);
4. UNCTAD (2012);
5. World Bank (2014)

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SOCIO-CULTURAL

ER3S72

JAPAN

CHINA

PAKISTAN

VIETNAM

69

63

56

53

(-1)*2=-2

(-2)*2=-4

(-2)*2=-4

6.4

5.4

5.1

4.9

(4)*4=16

(6)*4=24

(8)*4=32

7848

3298

449

1073

(-3)*4=-12

(-6)*4=-24

(-4)*4=-16

127.1

1,355.7

196.2

93.4

(7)*2=14

(0)*2=0

(0)*2=0

13080

1464

268

747

(-4)*3=-12

(-9)*3=-27

(-6)*3=-18

156.25

21.18

-1.29

23.52

*1

(-3)*1=-3

(-5)*1=-5

(-3)*1=-3

Labor Participation Rate % of

4
Work Force

59

71

54

77

*3

(7)*3=21

(-1)*3=-3

(9)*3=27

1.8

2.2

4.2

2.5

(-2)*4=-8

(-10)*4=-40

(-3)*4=-12

84.73

72.7

39.4

49.83

(-1)*4=-4

(-3)*4=-12

(-2)*4=-8

CO2 emissions (metric tons per

capita)

9.2

6.2

0.9

1.7

*4

(2)*4=8

(9)*4=36

(7)*4=28

92

30

70

30

80

118

70

80

18/10=1.8

-55/10=-5.5

26/10=2.6

Quality of Education System

*2
Intensity of local competition

*4
Electric power consumption
4
Per Capita (kWh)
*4
1

Population (Million)
*2
Consumer Spending Per
3
Capita (GBP)
*3
Quality Of Life Index

Business cost of Crime and

5
Violence
*4
Safety Index

*4
4

Uncertainty-Avoidance
N/A
Long-Term Orientation
N/A
TOTAL

Figure 7: External Factors - Socio-Cultural

1. CIA (2013);
2. Hofstede Centre (2014);
3. Trading Economics (2014);
4. World Bank (2014);
5. World Economic Forum (2014);
6. The Vietnamica (2012);
7. Numbeo.com (2014)

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TECHNOLOGICAL

JAPAN

CHINA

PAKISTAN

VIETNAM

R&D Spending Per Capita

1,2
(US$)

1260.42

217.69

14.68

5.8

(-5)*3=-15

(-8)*3=-24

(-9)*3=-27

3.93

3.52

2.83

(-3)*5=-15

(-5)*5=-25

(-6)*5=-30

4.8

4.5

4.3

4.2

(-1)*4=-4

(-2)*4=-8

(-2)*4=-8

4.4

3.2

3.3

(-3)*2=-6

(-8)*2=-16

(-6)*2=-12

17

26

14

(-4)*7=-28

(10)*7=70

(5)*6=35

5.4

4.4

3.8

4.3

(-4)*5=-20

(-6)*5=-30

(-4)*5=-20

5.8

4.3

3.4

3.3

(-4)*2=-8

(-7)*2=-14

(-7)*2=-14

5.6

3.5

2.8

3.1

(-4)*3=-12

(-6)*3=-18

(-5)*3=-15

8.1

3.8

4.5

4.2

(-3)*4=-12

(-2)*4=-8

(-2)*4=-8

86.3

45.8

10.9

43.9

*3

(-2)*3=-6

(-4)*3=-12

(-2)*3=-6

TOTAL

-126/10=-12.6

-85/10=-8.5

-105/10=-10.5

*3
Logistics Performance Index

*5
FDI & Technology Transfer

*4
University-Industry
4
Collaboration in R&D
*2
High-technology exports (% of
3
manufactured exports)
*7
Availability of scientists and
4
engineers
*5
Quality of Scientific research
4
institutions
*2
Technological Readiness

*3
Alternative and nuclear energy
(% of total energy use)

*4
3

Internet users (% population)

Figure 8: External Factors Technological

1. Subejo (2010);
2. Nature Publishing Index (2013);
3. World Bank (2013);
4. World Economic Forum (2014)

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3.3.

ER3S72

Findings and Summary

CHINA

PAKISTAN

VIETNAM

-2.1

-5.3

-1.6

0.6

14.3

Economic (Market-Related)

14.4

0.9

Socio-Cultural

1.8

-5.5

2.6

Technological

-12.6

-8.5

-10.5

10.5

-17.8

10.8

Political
Economic (Cost-Related)

TOTAL

Figure 9: Final Scoring

As can be seen from the table of final scoring, Vietnam should be the most
appropriate market for Elecdyne. The country has high ratings in the most valuable
factor economic, matches the companys strategic objectives for cheap resources
and positive market environment.
The promotion of FDI is part of Vietnam's strategy of development. Accordingly, the
government has continued improving its judiciary, offering more incentive taxation
policies for oversea investors, and trying to fulfill its commitments regarding the
international community. The Vietnamese government regularly organizes many
business forums towards the private sector, which could be positive opportunities for
Elecdyne to assert their interests, also establish fruitful dialogue. Additionally, as
discussed before, the local community is trying to remain a socio-political stability and
professionally promote investment activities, which are extremely important for the
company to build on their business. (Santander Trade, 2014)
A further advantage of Vietnam is that the industrial cluster is being widened. On the
electronic industry, all the enterprises are clustered tightly in either Ho Chi Minh City
or Hanoi (two biggest markets of Vietnam). In HCMC, new bridges connected with
near provinces called Dongnai, Binh Duong and Vungtau will further accelerate the
development of clusters (Sakata, 2014). Elecdyne could get benefits by exploiting the
collaborative advantages that clustering presents.

IV.

Internationalization and Choosing Mode of Entry

The next stepping stone for Elecdyne after choosing the most appropriate destination
is to evaluate the modes of entry that match best their strategic objectives. There are
three main options for the company to take into consideration including green field
investment, joint venture, or merger form. A greenfield project occurs when a
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multinational enter into a foreign country to construct a completely new venture.

Merger is a combination of two or more companies to create a new company,
whereas a joint venture is an arrangement between two or more organizations, in
which every party jointly remains responsible for pooling their resources to achieve a
specific goal.
(Investopedia, 2013)

The tables below will examine in detail each of those entry modes in order to provide
a comprehensive overview that helps Elecdyne to make the best decision for
internationalization.
GREENFIELD

Advantages

Exploiting the economies of scale and scope

Greater control of the business.
Best match with long-term strategies.
Commitment to the market becomes more solid
Easy to access vendor financing.
There will be press opportunities.

Drawbacks

High cost
High level of competition
Start-up procedures would take long time
High barriers of entry
No brand loyalty
Disadvantage in the short term due to government regulations

Rating
(The higher
bar, the
better rating)
Speed

Control

Cost

Risk

Figure 10: FDI Choices Greenfield

(TCii, 2012)

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JOINT VENTURE

Advantages

Drawbacks

Accessing additional financial resources.

Sharing the risks with co-venturers
Sharing the costs with co-venturers
Widening economic scope fast
Increased capability
Tapping newer methods, technological advancement from coventurers
Building relationship with vital contacts

Shared profit
Diminished control over some important matters
Unexpected outcome of the quality of the product or project

Rating
Speed

Control

Cost

Risk

Figure 11: FDI Choices - Joint Venture

(Joint-venture.swimintheincomestream.com, 2014)

MERGER

Advantages

Network Economies (economies of scale)

Better R&D
Avoid Duplication and Competition
Regulation of Monopoly

Drawbacks

Cultural differences and clash

Consumer perceptions mainly rely on previous companies
Reducing the labor force of the two organizations

Rating
Speed

Control

Cost

Risk

Figure 12: FDI Choices - Merger

(Pettinger, 2012)
According to the above analysis, the most suitable option for Elecdyne to enter
Vietnamese market should be a form of joint venture. It allows the company to follow
their strategy by focusing on cheap resources and labor, lowering the potential risk,
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and taking shorter time for setting up, thus makes the company find it easy to start up
a new venture. A greenfield sites, on the other hand, would be likely to cost more and
pose high risk due to the higher entry barrier and the longer time of setting up
procedures. Besides, a merger form would increase the risk since the cultural
conflicts and the loyalty of domestic customers and employees towards previous
images of the companies. Therefore, the recommended mode of entry for Elecdyne
is to create a joint venture with a Vietnamese local company.

V.

Conclusion

The report has conducted a series of analysis to figure out the in-depth knowledge
that Elecdyne need to gain before going global. As the complex nature of
international business, the STEEP table combined with the companys strengths and
weaknesses has been evaluated to have an overall view about the environment, and
to choose one of three possible countries to internationalize. By using PEST
weighted analysis, the three chosen locations including China, Pakistan, and
Vietnam have been critically examined.
Vietnam matches best the companys strategic objectives with a certain sociopolitical stability, positive economic growth, FDI attraction policies, and a young,
cheap manpower. Counterfactually, there have been some particularly weak points to
be considered before starting up their business. Although the government has been
undergoing reforms, the country has a weak economic structure, especially in the
financial sector which is seen as neither independent of the government nor well
regulated (Santander Trade, 2014).
In order to implement the companys internationalizing strategy precisely, a list of
entry modes has been made and analysed in detail. As discussed, a joint venture
should be the best option for Elecdyne, since it allows the company to easily entry
the market, gain access to cheap labour, and establish relationships with local
employees and executives to minimize the risk of cultural conflicts, thus they are able
to succeed in the Vietnamese market.

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