Introduction
Emirates Global Aluminium (EGA) is currently one of the leading producers, smelters and marketers of aluminium. This conglomerate has interests in various metal-related business activities, such as aluminium smelting, bauxite and alumina. With the current level of profitability and involvement in corporate social responsibility (CSR), this organisation has remained a reliable brand for many customers in the United Arab Emirates (UAE) and across the Middle East. These achievements explain why the intended decision to expand its operations to other countries across the globe could make it more successful and competitive. This research paper examines the most appropriate foreign market entry for India and how it can engage in successful marketing procedures to achieve its business aims.
Selection of Company
A detailed analysis of the background of this company can support the formulation of the best foreign business strategy. The history of EGA began in the year 1975 when Dubai Aluminium (DUBAL) was established as the first company to produce and market aluminium in the UAE (“About us,” n.d.). In 2007, the Emirates Aluminium (EMAL) was established to acquire, smelt and produce aluminium to meet the increasing demand for the metal in the country and across the region (Rahman, 2019). The birth of EGA became a reality in 2013 following the successful merger of these two companies (Thompson, 2020).
SWOT Analysis
Strengths
- Currently, EGA is one of the key partners of the region’s Gulf Aluminium Council (GAC). The purpose of this organisation has been to identify, promote and engage in evidence-based activities to meet the demands of all industries and companies whose business models revolve around aluminium in the Persian Gulf (“About us,” n.d.).
- This approach has continued to make it possible for many organisations to achieve their aims and meet customers’ demands.
- EGA has competent managers who focus on emerging concepts and strategies to expand and promote the heritage of the two pioneer companies whose business strategies remain essential.
- The company has an effective business model that ensures that most of the targeted customers and partners are satisfied with the available products and ready to achieve their business aims (Emirates Global Aluminum, n.d.).
- Currently, the company has around 7,000 workers whose obligations are essential to continue making it successful (“About us,” n.d.).
Weaknesses
EGA’s business model of semi-finished products and metals makes it prone to global rivalry.
- The company is yet to expand its operations in different parts of the world.
- The leaders lack appropriate strategies to predict possible trends in the global market and be prepared for them (McCartney, 2019).
- Additionally, EGA lacks adequate safeguards for eventualities and challenges that might affect overall production.
Opportunities
- The demand for aluminium at the international level has been on the rise. According to Thompson (2020), many countries are currently characterised by positive economic growth patterns.
- The wave of globalisation has the potential to continue supporting EGA’s business model and expansion.
- Demand for its metals is quite high since they are used to produce some of the products that define human life today, such as mobile phones, microwaves and television sets (Thompson, 2020).
Threats
- The demand of aluminium from other regions can affect its future performance.
- New competitors are emerging in both the developing and developed countries.
- Some companies are relying on superior models to recycle aluminium, thereby reducing their operational costs (McCartney, 2019).
- Plastic materials and products are replacing metals.
Selected Country: PESTEL Analysis
The selected country that EGA can consider to invest and achieve its international business aims is India. The 2019 report by the IMF World Economic Outlook identified it as one of the four countries whose economies have been growing very fast (International Monetary Fund, 2020).
Political
India remains a relatively calm and stable country. The government has considered additional reforms and changes that have the potential to reduce most of the obstacles that have been discouraging many foreigners to identify it as the favorite destination. Several initiatives have become common in the recent past that are supporting such an agenda. Some of the identifiable ones include Digital India, Make in India and Startup India (McCartney, 2019). These efforts are making it possible for more people to select this country as the best destination country. The latest developments in India foreign policy reveal that it is becoming the best place for foreign investment.
Economic
According to the International Monetary Fund (2020), India’s annual economic growth was projected to be around 7.2 for 2017 and 7.7 for 2018. These statistics indicated that the growth projection was more promising compared to that of China. The country has also on the frontline to support both local and foreign investments as one of the best approaches to improve economic performance (Banik, 2015). The government has been pursuing such a move to provide job opportunities to more people and make it possible for them to lead better lives. The level of foreign direct investment (FDI) in India has been on the rise. For instance, the country recorded investment of around 3.3 billion US dollars (International Monetary Fund, 2020). This observation indicates that the economy is becoming attractive and more competitive at the international level.
Social
The current population of India is capable of supporting the company’s business model since it translates to a ready market for some of the finished aluminium products. Foreign companies will find it easier to attract competent employees from the Indian community to complete various tasks and support the realisation of the targeted gains (Banik, 2015). Most of the citizens are currently earning better salaries and capable of supporting the overall performance of a foreign company. In this country, the migration rate stands at around 0.36 per 1000 population (International Monetary Fund, 2020). This is a decline of around 3.66 percent from the year 2019 (Ko, 2019).
Technological
The technology sector has also witnessed an increasing percentage of investment. The original norms and guidelines for foreign investments have become more relaxed (McCartney, 2019). Information, communication, and technology (ICT) companies can acquire share and attract more investors. Many technological corporations have been relying on this factor to invest in India (McCartney, 2019). Currently, India is one of the leading destinations of outsourcing in IT. Most of the citizens are technologically-savvy and know how to complete a wide range of projects in mobile apps and software development.
Environmental
India has become a leading country in terms of economic performance. However, the government is grappling with various environmental concerns that require evidence-based solutions (McCartney, 2019). For instance, the problems of resource depletion, increasing levels of flooding, discharge of effluents, and air population are still common in this nation. Forest cover has been on the decline while resulting in biodiversity loss (Das & Mohapatra, 2017). These environmental issues have the potential to disorient the performance and profitability of foreign investments.
Legal
The Companies Act of 2013 is the primary law that foreign companies need to consider when doing business in Indian. They can set up their own plants, branches, or partnerships with local firms. Such investors will also have to consider the existing policies regarding labour issues, remunerations, insurance, and industrial disputes (McCartney, 2019). Some other key laws to consider include the Payment of Bonus of 1965, the Maternity Benefit Act of 1961, and the Industrial Disputes Act of 1947 (McCartney, 2019). The implementation of ethical business standards is a requirement that both foreign and local companies will need to take seriously (Das & Mohapatra, 2017). Throughout the marketing and production processes, the company should ensure that the established principles and legal attributes are considered.
Selected Product
EGA is currently one of the leading smelters and marketers of aluminium in the Middle East. The consideration of a powerful business model will ensure that this company succeeds in the Indian market. The specific products that EGA will market in this foreign country are golf clubs made from its high-quality aluminium. An effective marketing model will be essential to make them desirable in this country. Golf clubs have been considered because India does not established companies that meet the demands of golfers. The move will ensure that EGA manufactures and markets high-quality gulf clubs. Such a product is important since it does not require a complex strategy while delivering positive results. Additionally, EGA is a leading smelter of aluminium, thereby being able to reduce costs for producing such golf clubs.
Marketing Mix
Product Decisions
The selected product is a golf club. It is made from pure aluminium and hardwood. The primary parts include the grip, the shaft, and the head. EGA’s product will be available in black, wine red, yellow, blue, and white colors for the customer to choose from. After launching the proposed subsidiary successfully in India, the leaders at EGA will have to consider evidence-based and practical approaches to support the marketing process. The first concern should be to replicate the local operations in the UAE to ensure that high-quality aluminium is used to produce golf clubs. These items will need to meet the standards set by the Indian government (Musah, Badu-Acquah, & Yusif, 2019). Such golf clubs should be in accordance with the demands and expectations of the targeted final users. This approach will increase the confidence of the targeted companies and manufacturers who operate locally and would be willing to acquire the product.
When more customers in India are satisfied with the available golf clubs, chances would be high that the company will record increased sales volumes (Ko, 2019). This achievement means that EGA will in a position to compete directly with some of the companies producing similar items in the country (Hopewell, 2017). The idea of R&D will be essential to improve operations continuously and support the delivery of superior golf clubs to the targeted customers. Additionally, the people of India have a positive attitude toward golf clubs made by reputable foreign companies. This aspect reveals that the company will achieve its goals much faster.
The strategic alternative that is capable of supporting the overall performance of this product is that of market penetration. This approach will ensure that all products are sold successfully within the stipulated period (Ko, 2019). The selection of competent marketers and the identification of the right channels will justify such an alternative and deliver the intended profits. The company will expect to have sold over 20,000 golf clubs within the first year.
Pricing Decisions
The pricing objectives include overcoming the level of competition and making profits of around 2 million US dollars within the first year. A powerful pricing model is needed for these golf clubs. The selected pricing strategy that will ensure that EGA overcomes the challenge of market rivalry is that of penetration pricing. The reason for such a choice is because the company will attract more customers and record profits within a shorter period. The environmental aspects and regions will influence the pricing decisions made. Customers in regions where golf is a common sporting activity will get lower prices. This approach will encourage more firms to make EGA the primary supplier of the best golf clubs in the country (Ko, 2019). The cost of the golf club would be around 300 US dollars. The leading competitors for this product in India include Callaway Golf India and Taylormade. These two rival companies market their products at around 300 and 320 US dollars respectively. The suggested price of 300 US dollars will support the penetration approach and eventually make the company more competitive. The company will be targeting sales amounting to 200 million US dollars. The reason for choosing this price per unit is because it will overcome the challenge of rivalry in the sector.
Place Decisions
The selected channel objective for this attribute is that of availability of the intended golf clubs in the targeted markets. The use of distribution channels will support the distribution of golf clubs in a strategic manner and ensure that customers are in a position to identify and purchase them in a convenient manner (Ko, 2019). The company will transport and deliver them to every geographical location to support the intended business model. The nature of this product explains why a simple channel of distribution will be essential. The members will include the company, direct marketers, and customers. However, retailers will be included to ensure that additional individuals are informed about the availability of the product.
Promotion Decisions
The target audience will include all potential golf players and competitors in India. The basic advertising message is that the golf clubs are cheaper and of the highest quality. The primary media will be the Internet since online marketing has become a common practice today. Additional promotional strategies will be essential to support the marketing process for the targeted golf clubs. The major ones will include the use of customer referral incentives, branded gifts for loyal customers, and social media promotion. Such approaches are in accordance with the nature of the intended golf clubs and the needs of the existing customers (Fahy, 2020). The company could also consider the need to replicate the UAE marketing model in India since it has the potential to deliver positive results within a short period.
The primary type of promotion will be the use of personal selling whereby trained marketers will be employed to identify potential buyers in the country. The reason for selecting such an approach is because rich members of the society will be prioritized since golf is their primary form of hobby. The model will inform them about the available golf clubs and encourage them to become loyal customers. The proposed promotion expenditure will be around 10,000 US dollars. The amount will be used to train potential marketers and sensitize them about the cultural aspects recorded in this country (Fahy, 2020). The budget will also cater for transport and online-based support. This initiative will support the realization of the intended business objectives.
MES Analysis
Introduction to MES
Market entry strategy (MES) is a concept that tries to describe the initiative a company selects to invest and deliver its products and services to the customers of a given region. This approach could entail an organization that intends to do business in a foreign country (Das & Mohapatra, 2017). Some of the entry strategies that leaders of a given company can choose from are described below.
Licensing
Licensing takes place when an existing company agrees to manufacture specific products for a given payment. This method is easy to launch and will result in timely gains.
Partnering
Partnering is a strategic approach whereby business entities collaborate in a long-term manner to achieve a specified competitive advantage (Das & Mohapatra, 2017). A given company can identify a potential partner in the selected country and pursue such a model to deliver the intended business aims.
Green-Field Investment
The green-field investment is another option whereby a corporation invests directly by establishing its fully functional subsidiary in the selected country. This model means that the organisation will develop its operations from scratch (Ko, 2019).
Joint Venture
A joint venture is another entry mode whereby two or more investors or companies pool their resources to complete a specified activity. The partners can focus on a given project or task depending on the anticipated goals (Das & Mohapatra, 2017).
Choosing the Right Market Entry Mode for EGA
With this information, it would be appropriate for this company to focus on the green-field investment. Since EGA has adequate resources and competes directly with established corporations in the region, this option is essential since it will ensure that it operates at a full-scale level (Ko, 2019). The company will start a subsidiary without the need to liaise with other companies. The leaders will have to analyse the existing factors and identify the most appropriate region to set up its operations. It will establish a plant that will be useful for acquiring the relevant raw materials and smelting aluminium. EGA will then rely on the current Indian population to get affordable labor and use it to achieve the intended business aims.
Success Factor for EGA in India
Several aspects explain why EGA has the potential to emerge successful and record positive gains. First, the company has low financial risk due to its positive performance in the UAE. Second, it has a good return on investment (ROI) and risk management strategy. This approach results in product differentiation liquidity, thus being able to record desirable gains (Ko, 2019). Third, EGA has the potential to reach the market through the use of an effective business model that resonates with the demands of the identified customers for the golf clubs.
Resources
The proposed entry for India requires a detailed plan and resources to make the venture successful. The predicted cost of investment would be around 5 million U.S. dollars. A functional plant will require 3 million US dollars to construct. This cost will also include the amount needed to acquire or lease land. The financial resources for operating the subsidiary will be around 300,000 US dollars. Around 500,000 US dollars will be enough to acquire the needed machinery for smelting aluminium and manufacturing the intended golf clubs. The company will allocate 500,000 US dollars to employ and train experts to produce the intended items, manage operations, and engage in marketing. The average cost for the factory manufacturing line should be around 500,000 US dollars. Leaders will, therefore, consider these requirements to come up with the total cost of investment. This amount will be required for setting the intended plant and launching operations successfully. Additionally, 200,000 U.S. dollars will be needed for hiring and training employees who can support operations and take the company closer to its goals. Currently, the Indian government is promoting taxation measures that favor the performance of foreign companies. Management aboard will be essential to support the intended venture. The marketing plan outlined above is essential to support the strategy and make the company successful. The consideration of a CRM approach will be essential to improve the level of performance.
Conclusion
EGA is presently a leading producer, smelter and marketer of quality aluminium in the UAE. Its business model makes it outstanding and capable of competing with local and foreign corporations. India is a developing country with a population of over 1.3 billion citizens. The existing legal and cultural attributes make it a favorite destination for a wholly-owned subsidiary. The leaders at this organisation will have to develop a superior marketing strategy that can overcome the challenge of rivalry and support the delivery of the proposed golf clubs to the targeted customers. These aspects will make it more profitable, competitive and successful in the wider Asian and Gulf regions.
References
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