What is the most appropriate market entry and why?
Introduction
Far East Orchard Limited is one of the leading firms owned by Singapore’s largest, most
exclusive and prominent 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 the 1968.
Australia is a continent on its own and is one of the leading economies in the world currently
sitting at number thirteen. It has a GDP of $1.4 trillion with an almost constant 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 Enterprises.
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
Research Proposal 2
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
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)
Research Proposal 3
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
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, Economical, Social, technological, Environmental and Legal factors must be
considered.(PESTEL) These factors cannot be controlled by any company but their effects and impact to
any organization cannot be ignored as such they have to be analyzed and evaluated to weigh their effects
on the company and its marketing strategies. Pestel analysis is crucial to the success of any product before
it’s launched in a new market or country. This enables a clear and realistic understanding about the
targeted market. Political factors include the Australian’s government’s policies that may impact
negatively on the ability of the business to trade freely. For instance restrictions on exports to certain
countries or imposition of certain unfavorable terms to certain imports. Politically Australian is a very
stable country whose democracy in the political domain serves as an example of good governance.
Australia is a very peacefully country and is ranked number 16 by the Global Peace Index. www.visionof
humanity.org 2012
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
The economic trends in Australia are very favorable for any kind of investment as the living
standards are very high and the consumer spending habits are favorable to the hotel and tourism
investment opportunities whose internal market can also be subsidized by foreign tourists who
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travel to the country mostly because of its exotic beaches and the surfing sports. Other economic
factors that may affect the business include the imposition of taxes and duties as well as the
existing fiscal decisions on interest rates and the exchange rate volatility. This analysis will assist
the business in financial planning and in its subsequent strategic financial planning.
The Australians GPI (Global Peace Index) is relatively peaceful and the social life is also
favorable to investment opportunities. The major aspects that should be taken into account are
the religious beliefs i.e. if there are religious fundamentalist or fanatics and if their actions may
interfere with the hotel business, the lifestyle expectations and the population demographics for
instance gender or ethnic backgrounds. (Jobber, 2004)
Understanding the rate of technological changes could add a comparative advantage over the
existing competitors and they also may present opportunities that could be exploited.
All business activities operate within the given frameworks of the host countries legal system.
These laws should be studied and any law that may adversely affect the nature of the potential
business should be quickly identified and addressed lawfully. These may include environmental
restrictions. The companies’ Act in Australia protects and ensures fairness in all trading activities
and dispute resolutions. The court system is functional and all decisions are respected and
implemented fully.
All business activities are regularly evaluated in relation to set international standards in relation
to the impact on global warming and the changing weather conditions globally. The Australian
government is a member of the UN assembly whose Environmental departments ensure the
protection of the environment. Pestel analysis provides a very useful tool for establishing and
Research Proposal 5
determining the overall opportunities and threats facing the organization. Australia’s
unemployment levels are estimated to be 5.1% and its vibrant Stock exchange total market
capitalization is US$1136 billion which 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
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.
Jobber, D. (2004) Principles and practices of marketing. London: McGraw Hill
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.
