Market-entry decisions and marketing strategies of MNCs for Asian markets : a case study of Thailand and Cambodia in the telecommunications industry | |
| Author | Hin Sopheap |
| Call Number | AIT RSPR no. SM-98-2 |
| Subject(s) | Telecommunication--Thailand Telecommunication--Cambodia International business enterprises--Thailand International business enterprises--Cambodia |
| Note | A research study submitted in partial fulfillment of the requirements for the degree of Master of Business Administration, School of Management |
| Publisher | Asian Institute of Technology |
| Abstract | Telecommunication sector is a major concern and development force of every countries in the world in order to be connected to each other. There has been rising revenue of telecommunication trade, both equipment and service. Asia has seen high growth of telecommunication sector as well as the liberalization and privatization of the industry. While most countries in Asia still lack well-developed telecommunication infrastructure, this is not a hurdles for entry of the telecommunication multinationals but in their perspective it consists a potential market for them. The competition is very strong, and price is going down. Many global players in telecommunication equipment supply are trying to gain position in Asia through different entry modes and marketing strategies. With the influx of multinationals across the frontiers, many authors have tried to identified various factors that influence their entry strategies in a foreign country. External as well as internal factors have been found as impo1tant factors. In addition to their global expansion strategies, several authors have suggested major factors: political, economical, socio-cultural, government policies, product factors, production factors, MNC's home countries' environment, and international experience factors. However, there are some arguments from a number of authors who haven't given more emphasis on some factors. After entering the market, the MNC faces other challenges. It is how best they formulate the success marketing strategies to take position in the market. What is really important is that many authors agree that MNCs must adapt their marketing strategy to some extent, depending on the local market environment and specific industry structure it serves. Besides the adapted marketing strategy, presale and aftersale services are weapons to gain superior advantage in the marketplace. Michael Porter's Five-Forces model is used in analyzing the competition in the telecommunication industry. The objectives of this study are to 1) To carry out a macro analysis of the countries and critical analysis of the factors which influence entry decisions of telecommunication multinationals in Thailand and Cambodia; 2) to analyze telecommunication industry in Thailand and Cambodia; 3) to study the entry objectives, entry mode and scope of telecommunication companies in each country and find out the factors that influenced their entry decisions; 4) to make an in-depth study of the marketing strategy of each firm after having entered the two countries; and 5) to study the level success of the companies in terms of competitiveness, market share and profitability. To validate the above-mentioned objectives, a methodology is developed by basing importantly on qualitative approach. Primary data and secondary data are required. Primary data is collected through in-depth interview with the general managers and marketing managers of three companies in the case studies. The three companies are chosen in Thailand and Cambodia. Alcatel is a French telecommunication equipment supplier in Thailand, and other two companies, Shinawatra and Millicom International Cellular are telecommunication service suppliers located in Thailand and Belgium respectively. The secondary data are collected from Internet sources, companies brochures, booklets, catalogue, business magazine, and policies guidelines. Using PORTER's five force model we see that in the telecommunication equipment industry we see that the new entrants face high barrier to enter the market. However, there is no threat from suppliers because the telecommunication suppliers mostly produce themselves. High threat of backward integration through joint ventures or strategic alliances between the foreign suppliers and local service providers pose a challenge for the equipment suppliers. New technology is replacing the old one and information technology is posing a high threat on telecommunication network (for those with only pure telecommunication business). The competition is very strong with the presence of five big global companies with strong financial strength and technological capabilities, strong commitment to be prestigious and technology credible in the market. In the telecommunication service in Cambodia we see that no high capital investment is needed. There is no threat from the equipment suppliers and the buyers on the service providers. However, there is strong competition and the low profitability due to many players in the market. There are specific factors influencing telecommunication MNCs' entry strategy in Cambodia and Thailand. They are forced to choose joint venture in order that they can have relationship with the government official and politicians. Having a local partner also help them to build strong connection with the latter although this form of entry mode can bring about problem of control and decision-making. This is because the regulation requirements and other technical issues does not allow other alternative mode. Political factors also affect the business indirectly, notably delay project application, delay implementation of acts for liberalization and privatization of the telecommunication industry. The telecommunication MNCs tend to look into the infrastructure of the host country which may provide potential market for telecommunication service and equipment. The country with lower rate of telecommunications offer opportunities for the firms to invest. However, it also depends on the economic indicators of the country and how highly the policy makers commit to the telecommunication infrastructure development. Once the telecommunication MNCs enter foreign markets, some of the elements of marketing strategy are adapted to local environment. Their segmentation strategy is to divide customers into different groups, and different products/services are tailored to meet the groups satisfaction. The positioning strategy is suited to the characteristics of each buyers in terms of their business purpose, technological capabilities, and financial strength. Quality of product/service package is a common theme in positioning in the marketplace .. The telecommunication MNCs target at the customers according to their purchasing characteristics. Differentiating their product/service is the critical strategy to get success. The market share is the most important objective of their marketing strategy in gaining a toehold in a foreign county. The equipment supplier modify their products according to the local climate condition while the service provider offers standardized service with the same quality as in other countries. The promotion strategy is changed according to the local markets but retain some content as a standardized message. Presale and after-sale service is very important for both the equipment suppliers and service providers. |
| Year | 1998 |
| Type | Research Study Project Report (RSPR) |
| School | School of Management |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Master of Business Administration (MBA) (Publication code=SM) |
| Chairperson(s) | Johri, Lalit M.; |
| Examination Committee(s) | Bechter, Clemens ;Gupta, Jyoti P. ; |
| Scholarship Donor(s) | Government of France ; |
| Degree | Research studies project report (M. BA.) - Asian Institute of Technology, 1998 |