Appropriate entry mode to foreign market (Australia)
Introduction
Far East Orchard Limited is one of the companies owned by Singapore’s largest and most
exclusive private property developer. It was incorporated in the year 1967 as Ming court Limited
which was renamed Far East Organization then Orchard parade Holdings limited in 1991 and
later after extensive restructuring Far East Orchard Limited came into being in July 2012. It has
been operating in the Singapore Stock Exchange since 1968.
Australia is one of the world’s largest economies sitting at number thirteen. It has a GDP of $1.4
trillion with an economic growth of 3.25% both in the year 2012 and 2013. Australia has a per
capita of $60000. These economic conditions make it a world class investing destination for any
multination corporation.
The selection of foreign markets and the subsequent entry modes are the most challenging
decisions for companies seeking to expand their markets for business survival and growth. The
growing intensity of competitive market strategies makes it mandatory for improved quality of
foreign markets and the mode of entry selection. (Douglas, 1989) The market entry strategies and
selection include making major decisions on the choice of particular target product’s market, the
Research Proposal 2
basic goals and objectives in the chosen target market, the entry mode and penetration strategy of
the market plans to control and monitor the performance of the target market penetration
strategies. (Root, 1994)
The process of country selection and mode of entry involves the preliminary screening, in-depth
screening and the ultimate selection. (Johansson, 1997) When screening the macro-level
economic indicators are normally used to select and eliminate countries that are less endowed
economically than the margin set for the choice of economic market and its underlying
objectives. The market size, the economic growth, the current existing product lines and the
competition are the notable considerations at this particular point.
The Australian’s economy; GDP and its growth rate are one of the best worldwide. When the
economy of a country is growing naturally most of its citizens are investing most likely in local
and foreign companies or even in acquisition of new homes and other properties. With a large
income per capita, most Australians have extra money for savings and investment.
Far East Orchard Limited business activities besides the hospitality industry also involve
construction projects. These two industries in Australia are currently the most ideal areas to
invest in. The profitability of Far East Orchard Limited is very high. In the year ending 2012, its
profits increased by almost 50% from the previous year while the total assets increased by 14%
in the year 2011 and by 2% in the year 2012. The net assets also grew by almost similar margins
for the same period. (Vance, 2003)
The best strategy for Far East Orchard Limited to adopt is the interactive approach which
includes multiple feedbacks and loops. These multiple feed backs help in performance evaluation
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and control. They also utilize economies of scales and location advantages. The risk involve
when expanding to overseas markets require constant revaluation of policies to ensure they are in
line with the companies objectives and goals. These goals have to be integrated with the
economic conditions which are prevailing in that particular country. (Roots, 1994)
The political stability in Australia and its democracy are founded on sound principles which are
fair and progressive. The country’s legal system is functional and fair which makes the country a
favorable economic investment center for any multi-national company wishing to invest wisely.
The major challenge with Australia is its competitive market and the distance. Australia is a
continent on its own and it’s isolated from the rest of the world because of the physical distance.
But currently, it has been fully integrated into the rest of the world economy and currently its
commercial and a large financial center in that particular region.
Australia’s unemployment levels are estimated to be 5.1% and its vibrant Stock exchange whose
total market capitalization is US$1136 billion is more than four times that of Singapore.
www.export.gov/australia
To invest in Australia, Far East Orchard Limited has to understand the competitive atmosphere
in Australian market in terms of products and services. Besides the common English language
Australia has also its own cultural and market differences which are vital in understanding its
market.
References
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Douglas, S.P. (1989), “Evolution of global marketing strategy: scale, scope and synergy”,
Columbia Journal of World Business, Fall, pp. 47-59.
Johansson, J.K. (1997), Global Marketing, Foreign Entry, Local Marketing and Global
Management, McGraw-Hill, Chicago, IL.
Root, F.R. (1994), Entry Strategies for International Markets, Lexington Books, Francisco,
CA
Vance, D. (2003) Financial analysis and decision making: tools and techniques to solve
financial problems and make effective business decisions. New York: McGraw-Hill.
