Having known needs Of globalization, it is time for companies to consider what objectives they want to achieve or in other words, what their motivations of globalization are. Three elements of motivation are focused in Daniels, Redheaded and Sullivan (2011) including expanding sales, acquiring resources and minimizing risks. After the motivation, what options they should take when it comes to entry mode should be considered. Killer (2013) argues that it is about how the product or service is distributed in and through the market. Different motivations lead to different entry modes. To acquire intellectual resources, for example,
Seized; and Gamesman (2002) indicate that there are four methods for companies in intellectual business to conduct their globalization business involving market and technology dimensions. Further, to be successful in the process of globalization, companies should be well aware of the business environment which usually includes political, economic, social, technological, etc. Because they are very important when it comes to company strategies (Wild and Wild, 201 2:310). However, companies preparing for international business often overlook the information they have as they think that they now the consumers in depth (Killer, 2013:2).
It would never be easy to have fully understanding of the changing business environment. This paper is about the investigation of external environments of three selected countries where the target company, Baud, is going to start up business. The next part is a brief introduction of Baud on its main business, its reputation, its strong domain, etc. After that, the motivation and the way that Baud is going to compete when it comes to new business in new environment will be considered.
Followed by the foresight of the business environment from the irrespective fatwa impact of 2008 global financial tsunami could bring to the target business area according to its performance between 2008 and 2014 period, as well as the influence that Baud may bring to the host economy, the PEST analysis is conducted to investigate the external environment Of three countries which are India, South Africa and United Kingdom and a numerical comparison offered by a grid where three countries are scored based on the data collected will be conducted.
The conclusion of the PEST analysis, the opportunity-risk matrix and the SOOT analysis is that United Kingdom is the cost ideal area for Baud to start new business because of its stable and transparent political environment, positive economic environment, intellectual labor force as well as the high level of national research and development and mature informational infrastructure, which all lead to a sustainable development opportunity to new business. About Baud Corp.. Baud (move. Baud. Com), the largest search engine in China, was established in January 2000. Its business covers as many areas of Internet industry as possible and so far Baud has become a comprehensive Internet service provider. In addition, it launched personal cloud service in 2012 and two years later, in 2014, began to provide big data service to the public known as “Baud Brain” (Yin, 2014).
The continuously expanding of Baud’s market share and its dominant position, for example, with largest popularity of 818% (CONIC, 2014) in China mobile online shopping search market, due to several strengths such as providing integrated Internet services, user-oriented advertising (Library work and study), hiring top scientists in related areas, strong identity among users, etc. Nonetheless, How, IL and Went (2010) argue hat the lack of product differentiation and core competitiveness are the common weaknesses among Chinese search engines including Baud.
In addition, owing to its experiences in China market, Baud is familiar with Chinese users while it lacks knowledge on foreign customer identities, which makes it difficult to launch international businesses. The strength and weakness can be tabulated as Table 10. 3 To Acquire Knowledge and Technology: Motivation of Baud’s Internationalization In terms of the motivation of Mines’ internationalization, three factors are highlighted, which re to expand sales, to acquire resources and to minimize risks (Daniels et al. , 201 1:50).
According to Huh et al. (2014:27) the information technology industry, where Baud operates, is categorize as a knowledge-intensive industry, which means knowledge or even technology play vital role. Further, in the knowledge-based industry, Mines’ opportunity recognition is not simply through occasional discovery but via proper “interpretation” of future battles based on Chancre et al. (2009:30). As a result, because of the future recognition on big data, Baud Corp.. Will pay abundantly in developing big data technology.
The problem is why Baud operates internationally instead of doing research and development domestically and what means will Baud adopt in this process? To address the first question, it is clearly understood that the information technology industry in some developed countries is more advanced than that in China and company can get access to the resources there as well as get synergy effect more easily than operating business domestically. Above mentioned will be discussed in detail later.
TO answer the second question, companies like Baud will be more likely to, in this stage, set up its research branches abroad alone but not with the velveteen in the same time. Citizen and Gamesman (2002) indicate that market and technology are the two drivers of R&D internationalization and when the company owns sufficient capital to support the overseas research but they need economic scale effect in the development centre, they will separate research divisions abroad and keep development centre in domestic area.
Besides the economic scale effect, considering that it is not familiar with other citizens except Chinese net users, Baud will not prematurely settle the business in other countries but the research centers. It is reported that Baud established new research laboratory in Silicon Valley (Parker, 2014) targeting one of the achievement of big data, the deep learning, and it is a proof of what is explained on means of Baud’s internationalization. 4 PEST Analysis of Ta regret Countries What are the environments of countries where Baud is going to start business?
This article is going to adopt PEST analysis to study the external environment of target countries which are the united Kingdom, India, and South Africa. 4. 1 Political Environment Chatty et al. (2012) argue that the political-legal risks are vital when dealing tit international business. Moreover, Smith and Illinois (1 971 ) emphasize that to predict long-term political environment where multinational enterprises operate their business is knotty but this can be addressed through numerical analysis.
In addition, to identify the key institutions and organizations is very important to understand the political environment (Kim and Hillman, 2008). As a result, the political environment investigated in this paper is concentrated on the key organization, the government, because of the characteristic of big data industry. Political environment includes the isolations of the government in the business sector as well as the stability and corruption degree of the host government, above which mentioned are important to start and run business.
In order to estimate the political environment, this essay applies start-up business procedures to register a business which partly indicates the regulation of governments and political instability index and corruption perceptions index which reflect the status to current governments. Besides the statistical evidence, Table 2 illustrates some regulations or policies of governments regarding to Internet privacy, loud security, etc.
The political environment in the united Kingdom is relatively ideal than other two countries owing to the instability politics in South Africa and complicated procedures of starting up business as well as highly corrupted government in India. We can see from the Table 1 that it takes very complex procedure to start a business in India while that in the rest of the two countries is much easier. Further, the complexity in procedures partly conveys that the new business regulation is relatively strict in India.
In terms Of the rest dimensions, South Africa is the most instable entry compared with the other two countries and South Africa as well as India score relatively low in corruption perceptions index where United Kingdom has highest score. Through the information in Table X, it can be clearly found that the regulation of Internet and cyber liberty in India is severely strict and South African Internet security policy is insufficient to provide a safe virtual environment especially regarding to the cloud safety.
Conversely, Internet surveillance in United Kingdom is much more sufficient and organizations and individuals can be guaranteed to have a positive cyber environment. Country Category Start-up procedures to register a business (in number)a Political instability (1-1 0)b Corruption perceptions index (0-1 00)c India 12 4. 5 36 South Africa 5 7 42 United Kingdom 6 4. 6 76 Source: areola Bank (2013); bisections(2009/10); astringency(2013) Table 1: Start-up procedures to register a business, Political instability and Corruption perceptions index of three countries. . 2 Economic Environment To estimate the economic environment that Baud is going to face, this article adopts economic factors in three aspects: the status of the economy, cost of business and the business risk. They cover the most fundamental parts of beginning and operating business in new environments. To be specific, the number of GAP, the figure of the GAP growth rate, the cost of start-up procedures as well as tax rate and fluctuation of exchange rate are the indicators of the contexts of the economy, the business cost and the business risk respectively.
In terms of the economic status (See Table 3 and 4), the United Kingdom enjoys a stable growth in economy throughout the last decade except the years between 2008 and 2009 due to the financial crisis, accompanied by “world great depression” (Eatable 2013: 75) where India and South Africa are affected to different extents with depression in some years but they have comparatively ideal average growth rate. By contrast, the United Kingdom recovered to the routine quickly but has a low growth rate.
Then in the business cost aspect, India is the costliest country when entrepreneurs want to set up and operate businesses there. In Table 5 and Table 6, it is illustrated that citizens in India, considering the level of general income, tend to invest more than people in any other two countries (See Table 5) and firms in India need to pay the highest tax in condition that they eave the same commercial profit (See Table 6). By contrast, costs of start-up procedures of South Africa and United Kingdom are significantly lower and their tax rates are also lower as well.