Evaluating Market Research Tools Assignment 2 : Global Marketing MM

Assignment 1: Risk Comparison

Attajit Boonsawad

MKT 515 Global Marketing Management

Phillip Stephen Scherrer, Ph.D.

July 27, 2019

Higher Ranking Country

Singapore is the high ranking nation selected for this project. Singapore is a country in South-east Asia with its capital in Singapore (city-state). According to the World Bank report, Singapore has a total population of about 5.61 million people (World Bank, 2019). Some of its official languages include Malay, English, and Malay-Chinese. It is a multicultural state comprising various ethnic groups such as Chinese, Indian, and Malay among others. The dominant religion in this nation entails Buddhism, although other regions like Christianity, Islam, and Hinduism are also present. Moreover, Singapore uses a unitary system of government where Halimah Yacob is the current president. Its current GDP as of 2019 is $589.19 billion ranking it 36th globally. It uses the Singapore Dollar as its currency.

Besides, Singapore ranks highly in several international rankings and has been identified as among the nations with the best technology, economy, and environment to do business. According to the World Bank, Singapore is ranked 2nd as a country with the ease of doing business (World Bank, 2019). The ease of doing business is one of the strengths of Singapore because expanding to this nation would be easy since difficulties will not face the establishment of operations. The World Bank also ranks Singapore 3rd as a nation with ease of starting a business which also presents the strength of this country when considering expansion. It means that a foreign firm cannot face significant challenges in starting its operations in Singapore. In the rankings regarding the ease of getting electricity, Singapore is ranked 16th which is reasonable but can be viewed as one of the weaknesses of this nation. This is so because other countries like Hong Kong and the Korea Republic are ranked as 1st and 2nd respectively in the ease of getting electricity. As such, a foreign company might encounter small electricity challenges when it expands to Singapore.

Moreover, Singapore is ranked 7th as a nation that protects the minority investors indicating that the company will be assured of security when it invests in this nation. The security will facilitate efficient operations, therefore enabling the entity to achieve its objectives. Singapore is also ranked 32nd as a country with the ease of getting credit which means that this would be beneficial to the firm because it will get a loan with much ease (World Bank, 2019). For this reason, the organization will ensure that it borrows adequate funds to enhance its operations in Singapore to achieve its goals. However, the ease of getting credit can also be problematic to the company because this might influence the enterprise to rely so much on external borrowing. In the long-run, this may hurt the firm's finances due to dynamics in economics. Regarding the ease of registering property, Singapore is ranked 21st; therefore, the firm will not face challenges in legalizing its assets and property to ensure efficient operations.

Nevertheless, according to CIA World Factbook, Singapore is a country with a highly developed and free-market economy with higher GDP, and corruption-free business environment. All these economic elements will be beneficial to the company because they will ease operations. For instance, a corruption-free business environment will ensure that the firm maximizes its profitability. Also, according to Transparency International, Singapore is ranked 3rd (85%) as a nation with lower corruption levels which will be beneficial to the operations of the company (Transparency International, 2019). Besides, Singapore is an active member in various trade agreements including the U.S- Singapore Free Trade Agreement (FTA) and ASEAN-India Free Trade Area (AIFTA). The existence of these trade agreements will be beneficial to the venture because they will ease operations by avoiding strict operational regulations.

Lower-Ranking Country

The lower-ranking nation selected for this project is Venezuela. Venezuela is a nation in South America that borders Colombia and Guyana on the west and east respectively. Its capital is Caracas. Besides, according to World Bank statistics in 2017, Venezuela had a total population of about 31.98 million people (World Bank, 2019). Spanish is the official language in Venezuela, and it is a multicultural state comprising various ethnic groups such as Mestizo, Europeans, and blacks among others. The dominant religion in this nation entails the Catholics (81%) although other regions including Protestants and Irreligious are also present. Moreover, Venezuela is a Federal presidential constitutional state where Nicolas Maduro is the incumbent president. Its current GDP as of 2019 is $76.46 billion rankings it 93rd globally. It uses Venezuela uses Petro Bolivar Soberano as its currency.

Besides, Venezuela ranks poorly in several international rankings and has been identified as among the nations with the best the worst economy, technology, and environment to do business. According to the World Bank report, Venezuela is ranked 188th out of 190 as a country with the ease of doing business (World Bank, 2019). The ease of doing business is an essential factor when considering expanding to a foreign nation, and in this case, the severe difficulty of doing business in Venezuela demonstrates one of its weaknesses. It would be a deterrent factor for the firm. The World Bank also ranks Venezuela190th as a nation with ease of starting a business which presents a weakness that the venture can consider before expanding to this particular country. It means that the firm will face significant challenges in starting its operations in Venezuela. In the rankings regarding the ease of getting electricity, Venezuela is ranked 186th which can be viewed as an economic risk as well as weaknesses when considering to invest in this nation. As such, the company might encounter significant electricity challenges when it expands to Venezuela.

Moreover, Venezuela is ranked 180th as a nation that safeguards the minority investors indicating that the company will not be assured of protection when it invests in this nation (World Bank, 2019). The security will impact the operations of the firm adversely, therefore preventing the entity from achieving its goals. Venezuela is also ranked 124th as a country with the ease of getting credit which means that this would be a threat to the firm because it will not get readily available credit, thus affecting operations negatively. However, the difficulty of getting a loan can also be beneficial to the company because it might not rely so much on external borrowing which may enhance its internal strength and independence. Concerning the ease of registering property, Venezuela is ranked 138th which is low and shows that the firm will face challenges in registering its assets and property, thus impacting its operations negatively.

Furthermore, according to CIA World Factbook, Venezuela is a nation with a poorly developed economy with lower GDP and a high corruption rate. Such economic elements will present threats to the company because they will make operations difficult. For example, high corruption rate in the business environment will affect the firm’s operations adversely. According to Transparency International, Venezuela is ranked 168th (18%) among the nations with lower corruption levels which will be a risk to the operations of the company (Transparency International, 2019). Besides, Venezuela is various trade agreements including the Association of Caribbean States (ACS) and Latin American and Caribbean Economic System (SELA) (Central Intelligence Agency, 2019). The existence of these free trade agreements will be beneficial to the venture because they will ease operations by avoiding strict operational regulations.

Primary Risks

Based on the above comparative advantage analysis, specific economic, political, and cultural risks are associated with expanding into Venezuela and Singapore respectively. Regarding the financial dangers, Venezuela has more economic risks compared to Singapore. According to the World Bank report, Venezuela is regarded as among nations with a poorly developed economy, whereas Singapore is well developed free-market economy (Central Intelligence Agency, 2019). For instance, the rate of corruption in Venezuela is high compared to Singapore; therefore, the firm will likely to encounter more economic challenges in Venezuela than in Singapore. The ease of doing business in Venezuela is also low compared to Singapore which means that the venture will likely to face more difficulties in doing business in Venezuela than in Singapore (Hitt et al., 2012). About the political risks, Venezuela has more political threats compared to Singapore. For example, Singapore has a unitary system of government which has played a vital role in cementing the nation’s stability. On the other hand, Venezuela’s federal system has contributed to its numerous political issues that would be a threat to the venture.

Moreover, both Venezuela and Singapore present cultural risks because of the existence of various ethnic groups in these nations. The multiple cultures will likely to affect the marketing activities of the company since each group tends to have its understanding of different promotional campaigns (Piekkari et al., 2014). Besides, concerning the competitive advantage, Singapore has more economic, political, and social advantages compared to Venezuela. For instance, Singapore’s better technology, free-market economy, and corruption-free business environment make it attractive to foreign investors because they can be sure of efficient operations (Shenkar et al., 2014). On the other hand, Venezuela’s economy is weak with lower GDP and high corruption rate which can be detrimental to a foreign firm wanting to expand to this country. Also, Singapore has a competitive political advantage because of its political stability compared to Venezuela which is not stable for efficient business operations.

Country selected and Why

Based on the above comparative evaluation, Singapore is the better choice and safer for the company to consider for expansion. The country presents several economic, political, and social factors that can guarantee the success of the venture. It has a stable economy and political environment, unlike Venezuela, thus, ideal for business operations (Aaker & McLoughlin, 2009). There is also an ease of doing business and protection of investors which are critical elements to consider when expanding. As such, expanding to Singapore will enable the enterprise to achieve its goals in the international market compared to investing in Venezuela.

References

Aaker, D. A., & McLoughlin, D. (2009). Strategic market management: global perspectives. John Wiley & Sons.

Central Intelligence Agency (2019). The World Factbook. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic management cases: competitiveness and globalization. Cengage Learning.

Piekkari, R., Welch, D., & Welch, L. S. (2014). Language in international business: The multilingual reality of global business expansion. Edward Elgar Publishing.

Shenkar, O., Luo, Y., & Chi, T. (2014). International business. Routledge.

Transparency International (2019). Corruption Perceptions Index 2018. Retrieved from https://www.transparency.org/cpi2018

World Bank (2019). Doing Business. Measuring Business Regulations. Retrieved from https://www.doingbusiness.org/en/rankings