Introduction
A shoe is just shoe a shoe and a car is a car. In the same line, Ron Sim, the founder of OSIM knows a chair is a chair. However, how that car, shoe or OSIM chair is marketed makes all the difference. OSIM has been in the market for the last 35 years, and the company has grown from local household to an internal brand. The phenomenal growth has not been the lack of fair share of challenges. The recession that hit Singapore in 1985 was the first propeller for the company to seek international markets. In Singapore alone, the company has no economy of scale and expanding the markets was only an option. The first move to expand the market started in Hong Kong in 1986, which was followed by moves in Malaysia, Taiwan and China. The company has anchored its root in major global economies since then.
OSIM Products in Singapore
In Singapore, the company started offering household hardware including items such as knives, knife sharpeners and mobile dry clothing rods. These products are not found in China under OSIM. The households’ services are more centered in Singapore than any other overseas branches. China has a great market, having one of the biggest populations. The level of industrialization put China on the global economic mark. It is with this regard that opening a branch in China will see OSIM expand the growth PESTEL Model
A business is affected by its internal and external environmental factors. The internal environmental factors relate to the internal factors which the enterprise can influence. These factors include but not limited to management skills, employee training and quality of goods and services. In converse, the enterprise has little influence on the external factors. These factors include government policies, economic conditions and social-cultural factors among others. PESTEL analysis of the external factor and how they influence business performance has been found applicable in the case of OSIM attempt to penetrate new markets .
The economic aspects such as interest rates, inflation and economic growth have a great impact on the business. For instance, the interest rates affect the amount of credit an organization can access. The economic growth determines how vibrant the market is to the products. The exchange rate determines the cost of importing and exporting products and raw materials. China is undisputed the growing economies in the world, and this provides an outstanding opportunity for OSIM to grow. The increasing economic growth will provide insatiable markets for OSIM massage chair. The access of credit is relatively higher than in Singapore. Nevertheless, the exchange rate may lower the attractiveness of the company.
China Ageing Population
Social factors touch on the area of the cultural issues such as health consciousness, population growth, age distribution and career attitudes. Social factors significantly affect how a company performs. Chinese are inherently hardworking and entrepreneurs, presence of new product will have receptive as it will fill in the market gap. The attitude towards the product, certain careers will have an impact on how a certain product performs in the market . China may have a negative or a positive attitude towards the OSIM massage chair. In rather unfortunate situation, Chinese have be known to have higher collectivism value as compared to individualism. People tend to work as families, and there are always reluctant to associate with strangers Trends in population growth will affect OSIM. A larger ageing population will translate to a lower working population hence a threat (see the figures in Appendixes). This may provide a challenge to the management. The management strategies may require to be changed and suiting the social-cultural.
Environmental elements have a direct impact on the economic activities hence affecting how different industries operate. These include environmental and ecological aspects such as climate change and environmental degradation. These factors affect the source of raw material. When there is massive environmental degradation, natural resources such as water will be limited hence adding to operational costs to OSIM. China is among countries that hold the largest population. The industrialization has also grown immensely. Coupled by flooding and other weather vagary, these two factors have stressed the environment significantly. Reduced access of raw material will limit OSIM in offering sustainable products. The growing awareness on the environmental issue also affects the product OSIM may offer. For instance, OSIM is competitive if it is offering sustainable products which are a limiting factor in China. Porter Five Forces and Government Model
In additional to PESTEL forces, other external factors are in play. Michael E. Porter developed five forces that affect how a business performs. These forces include bargaining power of the suppliers, bargaining power of the buyers, threats of substitute products, threats on new entrants and intensity of the competition. OSIM will face the threat from new entrants. After a successful campaign which has earned OSIM a name in the market. Other producers will strive to introduce their products to share the benefits. This will offer a challenge to the company, and it would require extensive market research to develop better products (Porter, 2007).
In china, the bargaining power of the suppliers is high due to an increased level of industrialization. The same case applies to the buyers as they have been exposed to a competitive market. The bargaining power might reduce OSIM productivity margins hence making it financially unattractive. In a newly established market, the intensity of the competition is expected to increase. OSIM is expected to the incur promotion and adverting costs to capture the new markets and maintain a competitive edge (Porter, 2008).
The sixth force of the Porter Five forces is the government. Government comes up with policies that can favor or hinder business growth. For instance, the government move to increase the tax levied to international industries will be a threat to OSIM. If the government implements policy allowing free trade, this provides an opportunity to OSIM. Latest move by the government to allow international labor will be an opportunity OSIM will tap. Nevertheless, the indigenous innovation policy which requires the regional and provincial governments to choose Chinese companies over foreign companies is a major setback for OSIM. The company has unique products and anti-monopoly law will affects how it performs.
OSIM Competitive Strength
The uniqueness of the OSIM product will provide a high demand for the products. The massage chairs and other products can hardly be imitated easily strengthening the markets of the product. China is a hardworking nation and introduction of recreational and lifestyle products will help OSIM capture the attention of the market quickly. The breadth of application of OSIM products will open large potential markets. The overall strategy will provide the company with a competitive strength. Conclusion
OSIM has hit global markets and has established a competitive position in the market. Their products have been synonymous with its exemplary growth right from Singapore to Asian countries. The stretch of success will continue though through research and development. OSIM management is engaged in competitive marketing and market research to improve their performance over the years. Nevertheless, establishing a new market will require combating the external environmental factors as which are summed by PESTEL and porter forces. These forces present both an opportunity and threats to OSIM. As it appears, the array of opportunities provides the company growth.
Figure 3 Source: UN, CEIC, Morgan Stanley Reserach
Figure 4 China economic growth
Figure 5 China ageing population
References
Collins, R. (2014). Is there a better way to analyse the business environment? Economics, 2-7.
Porter, M. (2007). How Competitive Forces Shape Strategy". Harvard Business Review, 23-28.
Porter, M. (2008). Competitive Strateg. New York: Free press.
Stanley, M. (2010). The Chinese Files: Chinese Economy Through 2020. Morgan Stanley research , 4-27.
