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IBS CA2 Version 1.doc - International Business...

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International Business Strategy (BA0910) CA2 FOREIGN MARKET ENTRY PROJECT ANG GEE SING (1451144) LUCAS LIM SHI JIE (1413346) WAIPRIB MONNASIT (1412262) LIM XIN YING TERESA (1413838) DBA/FT/3B/08 GROUP 3
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Table of Contents Executive Summary .................................................................................................................................. 2 1. Introduction & Overview .................................................................................................................. 3 1.1 Macro Environment Analysis .................................................................................................... 3 1.2 Internal Environment Analysis (VIRO Analysis) ......................................................................... 5 1.3 Implications .............................................................................................................................. 6 2. Industry Competitiveness Analysis in the Target Foreign Market ..................................................... 7 2.1 Bargaining Power of Buyers ...................................................................................................... 7 2.2 Bargaining Power of Suppliers .................................................................................................. 7 2.3 Rivalry among Existing Competitors ......................................................................................... 8 2.4 Substitute Products (or Services) .............................................................................................. 9 2.5 Threat of New Entrants ........................................................................................................... 10 3. Competitor Analysis (Leading Companies) ..................................................................................... 11 3.1 City Mart Holding Co. Ltd ........................................................................................................ 11 3.2 AEON Orange Co., Ltd ............................................................................................................. 12 3.3 Conclusion .............................................................................................................................. 12 4. Recommendations and Conclusion ................................................................................................ 12 4.1 Market Entry Strategy ............................................................................................................. 12 4.2 City Recommended ................................................................................................................. 14 4.3 Business-Level Strategy ........................................................................................................... 14 5. Conclusion ...................................................................................................................................... 15 Appendices ............................................................................................................................................. 16 Appendix A ......................................................................................................................................... 16 Appendix B ......................................................................................................................................... 16 Appendix C ......................................................................................................................................... 18 Appendix D ......................................................................................................................................... 19 Appendix E .......................................................................................................................................... 19 References .............................................................................................................................................. 21
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Executive Summary This report presents a brief analysis of the macro and internal environments of the Republic of the Union of Myanmar, followed by an in-depth industry competitiveness analysis of the country’s mass grocery retail (MGR) industry. As Dairy Farm International Holdings Limited (DFI) looks to expand its presence and establish itself in Myanmar, this report also provides recommendations on the most appropriate market entry strategy that DFI can adopt as well as a suitable business-level strategy that the firm can implement. A summary of our findings is as follows: Myanmar’s economy is growing fast, making it an attractive potential market to penetrate into. Our Porter’s five forces analysis shows that the bargaining power of buyers is high due to low switching cost and high level of consumer education. Since agriculture makes up a large part of Myanmar’s economy, it is easy to procure fresh produce, making suppliers’ bargaining power low. At the same time, the industry has a fairly high barrier to entry due to difficult access to distribution channels, unreliable energy supply, underdeveloped financial services, complicated government regulations and high rental rates, making the threat of new entrants low. Competition is also intense, with traditional forms of trade such as wet markets and mom-and-pop-stores dominating over 90% of the market. Threat of substitutes is expectedly high. The largest competitors are City Mart, which operates 34 outlets, and AEON Orange, a joint venture between the local Creation Myanmar Group of Cos. (CMGO) and Aeon, a Japanese supermarket giant. Having taken these factors into consideration, the market entry strategy that we recommend is for DFI to enter Myanmar’s MGR industry through a majority joint venture with a local partner, Capital Diamond Star group (CDSG).
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