There are many choices available for Phillip when entering into European market, making a judicious decision is the foundation of future success in the target market (Ekeledo and Sivakumar, 2004). There coexist proactive and reactive factors that motivate Phillip to expand its business outside domestic market. On one hand, Hardeep Software is specialised in serving small business, the niche market position would bring more money and have less competitors. On the other hand, the pressure of SAGE forces Phillip to seek opportunities to make up the declining domestic sales. Since that Phillip is lack of overseas marketing experiences, he really concerns about the risk in the early stage, the piggybacking provides him a good option to entry Europe market with lower risks than direct exporting.
The characteristic of piggybacking is much alike Export Management Companies (EMC); the merit of piggybacking lies in that Hardeep Software will benefit from its carrier who spends more attention on products supplied by Hardeep Software, as the EMC has more number of merchandises than the carrier of piggybacking procedure (Terpstra and Chwo-Ming, 1989). Generally, the products of rider (Hardeep Software) is not the competitive but have a compensative effect for the carrier’s product. Therefore, the carrier will do his work to find a right niche market for Hardeep Software, who will achieve more efficient market development and sales returns with the support of carrier.
Finding a good carrier, who will promote products and absorb most of the expense; this will release the Hardeep Software’s marketing cost pressure. In addition, Hardeep Software will have an opportunity to utilize its carrier’s advantages in distribution channels and brand influence to search for the potential customers (Jonas and Tommy, 2003). Maintaining a friendly partnership with the carrier will contribute to the improvement of management level of Hardeep Software and products in the international market. Upholding the principle of long-term cooperation and win-win development will be valuable, as the rider can benefit from working experience through the piggybacking process (Terpstra and Chwo-Ming, 1989).
Evaluating the Strategy of Developing Wireless Card System There is so much potential in the development of wireless systems for hotels. At present, an increasing number of guests are becoming more dependent on the wireless devices in the travel. Hotels with a wireless system have the capability to improve the operational efficiency by reducing employees’ response time. The basic determinant of achieving sustainable competitive advantage is creating added value to address customers’ requirement. The wireless system simplifies the arrangement of room reserving for customers, which can upgrade the service level and ultimately fulfill high customer satisfaction (Smith, 2005).
Developing wireless card system allow Hardeep Software maintain the market competitiveness, as well as improve the adaptive ability to the dynamic market environment. In addition, the wireless card system stretches the product line that can weaken threats to the single Funds Master (Werther, 1995). The approximate technical features to the Funds Master save the R&D cost. However it requires David to conduct a review of all resources for the project requirement to allow the efficient strategy implementation. It seeks to save the sales and marketing cost wherever possible (Wu, 2007).
The wireless business has a better financial performance than Funds Master; the net profit of wireless card division has an 8% growth in 2007 compared with a 42% decrease in the net profit of Funds Master. In addition, it costs less to establish a wireless system than the Funds Master work and provides more profit space and comparative cost advantage. According to the concept of product life cycle, the wireless business is in the early development stage with little growth and limited margin, but sales will be increased rapidly in later stage (Dawn, 2005). It is expected that the wireless business will replace the Funds Master as the primary sources of sales revenue.
Expanding Business in China The Chinese software service industry made extraordinary progress over recent five years. Social stability and the healthy development of economy provide a reliable business environment for multinational companies. As the perfection of information infrastructure, there is a great potential in the chinese software service industry (Zhao, 2008). Key Factors in Software Service Industry Large Future Development China is in the transition from a command to a market economy, the software service in china is growing rapidly in these years. The increasing rate of Chinese software service in first quarter of 2008 was 9.9%, with 1% higher than the same period of last year (Wang, 2008). Graph one represents that the Chinese software market worth 4bn in 2007, software service takes the leadership over 54% of total market share (2.16bn) because software service rarely face the harm of privacy (LIVE-PR, 2008).
Graph One: Chinese Software Market Government support The Chinese government issues the 11th five-year development plan with the aim of creating a harmonious environment for overseas investors; the introduction of preferential policies is to encourage foreign software service companies to establish business in the form of joint venture and commit resources allocation to the fair competition (Kang, 2006). Since China’s entrance into the WTO, Chinese government abolishes all software tariffs, foreign investors are admitted to have more flexible trading environment and maintain a good momentum of technical corporation with chinese enterprises (Wang, 2004).
Labour Costs Advantage
The salary of workers in Chinese software service industry is much lower than foreign level; statistic showed in graph two indicates that the average wage for Chinese software service employees is one fourth of their counterparts in UK (Zhang, 2007). Following three cities represent the regional salary standard in China, Beijing (North) 5500, Shanghai (South) 4500, Xian (West) ï¿½2500. There were approximately 60000 graduates of software program in 2007; the ratio of bachelor degree holders to mater degree holders was 7:3. Most of them have the aspiration of working in a foreign firm because of good training and better pay.