Discussion of the foreign market strategy of Land Securities Group: South Korea.
Introduction
The ubiquitous nature of the global economic posture prescribes the need for critical assessment, in terms of choosing which countries are most appropriate for foreign market entry consideration. The task of the essay herein involves one of Forbes Global 2000 list participants, the Land Securities UK real estate group, which holds the number 802nd position. Its assets, approximately £9.1 British Pounds ($12.2 Billion USD) reflect its founding in 1944, under the current auspices of CEO Robert Noel. While researching the consideration of choosing from among the three target countries for entry to South Korea, Singapore, or Qatar, an application of the institutional-based view forms the basis for this discourse. Keys to understanding involve Land Securities corporate strategies, and potential implications of all three target countries. This multinational enterprise MNE must focus upon realistic facets of foreign domestic investment (FDI), and decide upon the best path to cooperate with other cultures’ international business applications.
Discussion
The feasibility of South Korea as the chosen country for foreign market entry penetration appends to the strategy direction which appears to match Land Securities vision for potential strategic inroads, of expansion overseas. First of all, Land Securities, by definition, is “the largest listed commercial property company in the UK by market capitalisation,” holding myriad offices throughout London and the United Kingdom (Our vision & strategy 2016). Robert Noel himself, CEO of the MNE indicated that there was a need to behave in the correct manner, because they depend on people’s support. This is extremely key to comprehend. The reason why is because as emerging economies present greater opportunities for global economic expansion. Thus, it is imperative to pay attention to the socio-political condition of regions and cultures, in order to integrate international business which keeps global commerce afloat in the first place. A very interesting set of factors makes South Korea both an exciting choice, and viable in terms of sustainability, and capturing profitability across borders.
One latest set of data findings off recent newsreel gives a clue. According to the source (PR Newswire 2016) the online demand for online retail business outlets in South Korea has stunning boomed at what has been described as a substantial growth rate, despite the 2008 Global Recession. Obviously, the growth is a sign of key performance indicators, given the factor that the burgeoning usage of high-speed Internet technology has coupled with the smartphone market. South Korea, according to general common knowledge, has had the reputation of possessing some of the highest Internet speeds in the world. Converging this reality with high proportions of people beginning to engage in the e-retail market, shoppers’ activities are expected to abound to multi-level millions of USD dollars until 2019 (PR Newswire 2016). Much of the affluence of South Korea’s online retail market place is segmented towards beauty products, fashion, electronics, book/stationary, and home products. Therefore, their purchasing power parity (PPP) may be suitable for Land Securities to successfully attempt to figure out how to externalize its capital activities in this foreign market. The idea may be approached by organisation of shared assets potential, as suggested in the course study guide.
Global business activities naturally strive to draw on sustainability, and managing more frugally in terms of economies of scale. The Land Securities Group has an undoubted commitment to sustainability, as interpreted in the firm’s vision. The announced goal and vision, as derived straightaway from the company, seeks to be the most superb property management enterprise in terms of serving employees, sustainability support, and efficiency in innovative design. These objectives would merge well with the high-technology commerce of busy activity in South Korea’s economy. The exposure that South Korea has with familiarity and usage of e-retail and online commerce activities, reflects an affluence and intelligence that Land Securities may be able to tap into. By building and foraging new mutually beneficial partnerships – with tangible and intangible assets – a foreign market entry into South Korea may be the opportunity to create or uncover an ideal market mix. If Land Securities could form an extrapolation, and framework for problem-solving in the area of residential/commercial infrastructure spaces, a great partnership could result.
Obviously, research of business and marketplace culture suitable to all conditions would be a prerequisite. However, according to one scholarly source (Michalski 2015) the way to discover how to best penetrate a foreign market is comprise of several crucial steps and components. Salubrious planning renders the initial stage, wherein a necessary determination must be performed to evaluate the marketing mix, and check the fit to the foreign business context. Next, is recommended that the strategic elements comprise into a framework that brings relevant theory into integration with actual practice, selling the right stuff at the perfect timing. Nevertheless, a forewarning is in order, as customers and business culture must be respected. Since Land Securities CEO, Robert Noel, has an outstanding record of success, and an open enough mindset to pursue growth alongside sustainability – while respecting the factor that people need people – a foreign-market directed project design with South Korea might focus on efficiency in preservation of natural resources. The project may come in the form of better sustainable residential housing, or commercial building infrastructure with high-standardisation in safety. Another concept might include a network of South Korean offices expansion in the UK, where the presence of certain key technologies would be an asset for Land Securities and both countries mutually. The same aforementioned article continues to mention that in foreign market entry situations, four Ps are important to consider (Michalski 2015). These basically breakdown into planning in marketing/sales, personnel by identification of required skills, practices of business within the cultural venue of the target market, partnerships strengthening, positioning coupled with how perception is cultivated by middlemen, and protection against risk potentials. Depending upon the precise nature of the value-added proposition, foreign market entry development approaches will differ with each situation. Communication and all sorts of clarification is obviously part of the process. Thus, some possibilities could be the construction franchise-partnerships, controlling acquisition of assets, factory upgrades, and sustainability designs in infrastructure, as examples.
Overall, the corporate strategy of Land Securities has been to exceed all levels of excellence in the real estate industry in the UK. Foreign direct investment would be differently designed if directed towards Singapore. Facilities, mergers, or joint ventures offer a broad range of foreign market entry advantages appropriate to the target country. In the case of Singapore, the business culture is unique. Additionally, Land Securities Group would be advised to conduct an extensive research report on the current state-of-affairs that accurately characterizes the contemporary status of Singapore on the Global Competitive Index. The actual report, ranks Singapore quite high as number two in the international economic scheme in overall competitiveness for its economy (Schwab 2016). On the face of the matter, such a formidable ranking in worldwide economic competitiveness may seem like a good thing, which Land Securities may wish to explore. But if you really think about it, perhaps entering a foreign market wherein the economy is already fortified may not present a way to create a mutually beneficial relationship. Furthermore, according to the same report Singapore ranks 12th in the world in the category of ‘macroeconomic environment’ – which probably speaks to hidden challenges in the local market conditions (Schwab 2016, p. 11). The potential implications, as such, suggest that the formal institutions of Singapore are proper, while informal institutions could potentially raise questions of risks. In other words, everything that glitters are not gold. Ranking even further down in position number 35, according to the same aforementioned source, Singapore’s market size is not all that great. Openness, interconnectivity, and trade barrier climate are sometimes difficult to purely measure.
South Korea, (the Republic of Korea) and Singapore do have commonalities, however. Both are considered as part of the miraculous economies of East Asia. Since Singapore is also among the top three most competitive economies in the world, sharing the triad-rank with the United States and Switzerland, foreign market entry for Land Securities might be a stumbling block. The rationale behind this idea is because the competition is comparatively less fierce in South Korea. Yet, dealing with South Korea the firm may participate in what the report deems as the ‘developing Asia’ – as the “world’s fastest growing region since 2005,” accounting for thirty percent of “global GDP” (Schwab 2016, p. 19). The labor market is supposedly attractive in Singapore. But this is most likely due to the plethora of reported labor abuses running rampant, which scores of documentation bears witness to. It is highly improbable that Land Securities CEO, Robert Noel, would want to risk marring his organisation’s reputation of being associated with profiting off the misery and exploitation of people. One current newsfeed reported how one woman in Singapore was severely beaten by an employer for eating one biscuit in the kitchen, following the episode she ran away finding shelter in a humanitarian charity (O’Brien 2015). Seriously, this is most unlikely a scenario that Land Securities wishes to risk an association with.
Potential Implications of Formal/In-Formal Institution Target with Qatar
Most theories and textbook admonitions do not realistically take into account cultural norms, and unspoken rules of values among people. One key barrier to entry is language, however knowing Arabic for the purpose of foreign market entry into Qatar fails to recognize the full scope of the proposition. Three main elements of consideration for entering foreign market agreements in Qatar correspond to the country’s regulatory/legal statutes, its growth potential, and specifically any UK business opportunities on the horizon. One valuable set of insights to this end hail from a report published by the UK’s government, Department for International Trade. Applications for implementation of a global business strategy with Qatar, of course must strictly meet on a formal institution-based view. According to recent data findings in the report, Qatar represents the third largest economy residing within the Gulf Cooperation Council (GCC) region, of the Arab world (Doing business in Qatar 2015). This is statistically formidable. Especially when considering the following two factors: (a) Qatar planned US$220 billion investment in infrastructure during the upcoming 7 years, and (b) chosen site for the 2022 Football World Cup, the same source announced. One positive feedback for Land Securities proceeding in any future foreign investment activity in the country, is a strong English-language presence, historical-cultural ties, and scores of British business enterprises already having established shop in Qatar.
While it is true that Qatar society is modernizing, economically stable, and rife with individuals with high-net personal wealth, challenges do abide indeed. Quite the obstacle and risk involved, Qatar’s business rents-prices and fees are enormous, including the rise of residential and commercial properties as well. The currency money-markets reflect the Qatari Riyal as “tied to the US dollar” so when the exchange rate soars, so do expenses (Doing business in Qatar 2015). Still, overall, growth potential in Qatar for a UK firm like Land Securities Group is promising.
Conclusion
South Korea and Qatar could equally be good propositions for Land Securities to invest in a foreign market entry strategy. It depends upon the type of projects, risks, and choices in approaches to decision models the firm wishes to take advantage of. The comfort zone of already having a foot-in-the-door with British-English presence in Qatar presents one kind of locus of control in foreign market entry. Familiar characteristics have their place. An innovative ‘ice-breaker’ into new arenas, are perhaps representative of foreign market entry into South Korea. A reliance on rational assumptions, careful research, and legal/budgetary constraints ultimately will decide on the best road to take. Murphy (2012) suggested all firms must smartly leverage their resources. Hakimey et al. (2015) asserted a keen awareness of South Korean culture, would inform international business persons to better cope in current or future partnerships. The mode of entrance into South Korea may include import/export, but primarily deal with licensing, FDI in infrastructure, and/or joint venture projects. Evaluation research must be defined, preferably through the lens of wise risk management.
Bibliography and References
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