Rapid Pump International Entry Strategy into Indian Water and Energy Market
The final project is a fun, practical activity where you can apply what you are learning in the course to a select product and a target foreign market. Your task for the final project is to plan a realistic market launch, from introduction through stabilization of operations. "Launch" applies to the target market where you want to sell your product. You are to select a product (not a service), real or imagined, that will be launched in a country other than the United States. Your product may be produced in the U.S., in your target market, or elsewhere.
You will submit your final project in this module. By now, you have already obtained approval for your proposal (submitted in Module 3) and have completed the project outline (submitted in Module 5). The final project will consist of your business plan and an Excel spreadsheet of anticipated cash flows (expenses and income) with the resulting bottom line (profit or loss) for each year.
For the final project, you are responsible for presenting your analysis and conclusions on the following:
The rationale for choosing your product.
The rationale for choosing your target market.
The rationale for choosing the country where your product will be made, including a brief background of the industry in the market, as well as competitors.
The strategy you will employ to launch your product; items to include should include entry decisions and intended mode of entry.
The organizational structure you selected to support the launch.
Sales, marketing, logistics, cultural, and political aspects.
Financial management considerations for the launch, including foreign currencies, tariffs, and overall foreign market exchange considerations.
This paper will give you the opportunity to integrate all aspects of this course into a real-world scenario. Please be as realistic as possible. Show that you understand how to apply the concepts of this course in a practical project.
While your instructor is more interested in your initiative, and the quality and realism of your analysis and conclusions versus the length of the paper, it is expected that the paper follow the aforementioned requirements.
Things to Remember!
Your paper should be 7 pages in length (not including title and reference pages).
Your paper should be double-spaced, with 1-inch margins, in-text citations and references for all sources following proper APA formatting.
Institution
Date
Introduction
RAPID pump is a venture that deals in providing high-end commercial pumps used in both large and small scale. Based in the United States, the company has its sights in expansion in the emerging Asian market. To realize this, the company plans to set up an assembling plant in India to supplement the growing demand for its products. International globalization according to Ball, McCulloch, Frantz, Geringer &Minor (2006) is the ability of firms to integrate goods, technology, labor and capital to link and implement its strategy in a global sphere. Entry into a new market means that business needs to take into consideration political, technological, market, cost and competition aspects of the intended market. Market entry strategy is an important factor for success (K.D. Brouthers & Nakos, 2004). Dev, Brown and Zhou (2007) argue that before joining a foreign market, one has to do a thorough market analysis and come up with foreign entry strategy. In order to successfully launch in the foreign market, RAPID pump will analyze the Indian market and lay down entry strategy. In the following paragraphs, the paper will determine international entry strategy to be used by RAPID pump to enter into Indian water and energy market. It will highlight the organizational makeup of RAPID pumps, and the criteria used to choose the country of entry and which country is chosen. It will delve into the nature of the market and the level of competition. The entry mode which was chosen by the company and how it should be implemented in order to increase chances of success.
Rapid pump over the years has seen tremendous local growth with record sales in domestic market. The company was founded in the year 2005 in Dallas Texas. It has thirty employees and has agents in Australia and Canada. RAPID pumps specialize in making centrifugal pumps both industrial and agricultural. The company also makes a wide variety of submersible pumps, polder pumps, dewatering pumps, sewage and submerged centrifugal pumps among other pumps. The range of pumps also includes domestic pumps and induction motors. The company's mission is to successfully develop and produce high quality and energy efficient pumps for agriculture, industrial and domestic use at an affordable use. It envisions being environmental friendly manufacturer and supplier of high efficiency and excellent quality pumps.
The company endeavors to serve the American market, South American market, and Asia in the future by positioning itself as a market leader. The pump market requires specialized production in which RAPID ensures by taking its employees through specified in-house training to master the critical production requirements for the products. RAPID's primary emphasis is on quality first. This approach has helped built a larger customer base within the American market which the company has retained as its loyal customers. It is the niche maximization strategy employed by RAPID that has powered its tremendous growth. The product is chosen as it has demonstrated to be a hit within the American market and the success is replicable in other countries in Asia, Europe, and other continents.
In selecting the country of launch, the main driving factor was the country with potential for success. Various countries were reviewed across the continents from Mexico to India. The Asian market is lucrative and offers a launching platform to RAPID through entry into India and later on spread to other Asian countries. The selection used screening model of Ball, McCulloch, Frantz, Geringer & Minor (2006) to select the target country. According to the model, it takes six steps screening to determine the target market. The steps are financial and economical screening, potential market testing, political and legal set up, socio-developmental screening. Most target European and Asian countries enjoys a rather stable political set up and are relatively developed. Owing to the stability of these countries, the analysis did not factor in the second and third step. After elimination of various countries on the basis of their potentials, the Indian market was chosen because of the agricultural pump market in India that grows at seven to eight percent annually. Favorable government policy favors agriculture pump business. Another factor is the fluctuation in groundwater level in India that amplifies the demand for agricultural pumps in the market. Moreover, the rising population and urbanization in India boost demand for pumps and the healthy economic outlook and political stability make the industry lucrative for a new entry. Through the government promotion of five-star rating and subsidy with every connection, the market for energy efficient pumps in India continues to grow. India is stable politically and enjoys healthy democracy (Shah, Singh, & Mukherji, 2006). It has little bureaucracy. The economy is steady with high growth rate and innovative attitude among its citizens. Socio-cultural practices of the Indian people are informal and open to international influences.
According to the porter (2008), there is five forces framework which impacts new market entry. The framework includes the threat of a substitute product, rivalry among existing competitors, the threat of new entrants and the bargaining power of suppliers and buyers. The framework is further analyzed in details as below.
Competitors
Existing competitors engage in the rivalry in various forms that include price discounting, an introduction of new products, advertising campaigns, and service improvements. (Porter, 2008). Intense competition among competing products waters down the profitability of the industry. The basis of competition and the intensity of the rivalry determine the degree to which it drives down industry profit potential. While there are other pump makers in the Indian, market, the rival is weak, and the industry remains profitable.
Threat of new entrants
When new firms enter a market, they bring in new capacity and desire to gain market share which pile pressure on the prices and the rate of investment necessary to compete (porter, 2008). The profit potential of an industry is therefore affected by new entry. The major threat to RAPID pump entry into the Indian market is the VARUNA, which is the market leader in the Indian market.