A market entry strategy into a foreign country enables an international organization to capture new market niches and increase salesa revenue. However, entry intthe o a foreign market is one of the most difficult tasks that require a multinational corporation to develop effective methods of eliminating entry barriers.
Specific business aspects such as competition, price, trade regulations, knowledge and skills, and trade subsidies may inhibit entry into a given market. This study looks at the issues that BRP would consider before investing in a foreign country such as New Zealand.
Why the Country Was Chosen
Snowmobile business would be the most appropriate venture in a country like New Zealand due to its topography and climatic conditions. The country experiences frequent snows every year. The demand for snowmobile devices such as snow boats and ski-doo sleds is also high. New Zealand is one of the countries where snowmobile racing is practiced as an official sport.
PESTEL Analysis
Political Factors
The political environment in the country is favorable for the snowmobile business since the government encourages investment in the sector through provision of trade subsidies. The political conditions of the country are also very stable. New Zealand is one of the countries in the world that enjoys political stability that is suitable for trade and economic development.
Economical Factors
The country is currently experiencing tremendous economic growth due to increase in investment, consumption, and expenditure. The rate of foreign investment in the country has also increased since the year 2003. The government of New Zealand has also adopted good economic policies to ensure economic growth.
However, the country’s economy mainly relies on external demand for goods and services produced within the country. There is low investment in research and design initiatives, which therefore make the country to rely on external technology. In this regard, BRP has to invest in technology in order to overcome other rival firms in the same industry.
Social Factors
Social factors play an important role in determining the entry into a foreign market. The factors are important in defining consumer behavior. With regards to social factors, New Zealand has a social background that is mainly hinged on activities such as sports.
For instance, football has been used in the country as the main tool of advertisement for most products. Snowmobile racing is also a common sport in the region, especially during winter seasons. To capture the market, BRP should establish effective strategies that will be aimed at creating awareness of snowmobile racing.
Technological Aspects
The pace of technological advancement is very slow, especially with regards to technology in the industrial sector. Most companies in the country rely on imported machines from countries such the U.S.A, Germany, Japan, and Canada. The cost of industrial technology is very expensive in the country and hence the need for a large amount of capital for the initial investment.
Legal Aspects
The snow mobile industry is one of the highly regulated sectors in New Zealand. One of the common regulations in the country requires the companies to sell their products to the consumers under very strict conditions. For instance, one has to obtain a legal registration before owning a simple machine like a ski-doo. The cost of registration is also very high for most consumers to afford.
Environmental Issues
Environmental issues are some of the major factors that affect the performance of the industry in the country. The sector depends on environmental conditions for its growth and performance. The country experiences regular snow, especially from September to December every year. However, it also suffers from other environmental calamities such as earthquakes.