Excerpt
Table of Contents
Chapter-1: Aims & Objectives
1.1. Background Context
1.2. Motivation
1.3. Research Aims & Objectives
1.4. Method
Chapter-2: Aims & Objectives
2.1. Foreign Market Entry Strategies
2.1.1. Market Selection
2.1.1.1. Relationship
2.1.1.2. Psychical Distance
2.1.1.3. Other Factors
2.1.2. Entry Mode
2.1.3. Operationalising of the Market Entry Process
2.2. Indian Software Development Industry
2.2.1. Attributes of Indian Software Development Companies
2.2.1.1. Advanced Technology Software
2.2.1.2. Export Orientation
2.2.1.3. Limited Resources
2.2.1.4. Targeting Foreign Markets
2.3. Western European Market & It’s Characteristics
2.3.1. Increasing Needs for Outsourcing
2.3.2. Market Potential
Chapter-3: Case Study
3.1. Company Profile
3.2. Market Selection
3.3. Entry Mode Selection
3.4. Operationalising of the Market Entry Process
3.5. Challenges Faced by Helios Solutions
Chapter-4: Discussion, Conclusion & Recommendations
4.1. Discussion
4.2. Conclusion
4.3. Recommendations (Implications for Further Research Work)
Chapter-5: References
Executive Summary
This theory into practice report is written on the topic of ‘Identifying certain characteristics of marketing strategy for Indian software development companies in entering Western European market’. Main aim of this report is to identify certain characteristics that would permit Indian software companies to develop successful marketing strategies. It has been analysed that India has managed to hold India dominant position around the world in the software development field. It has been observed that the growth intensity of Indian software development industry is much higher than countries. It seemed to be difficult task for the companies to formulate strategies for entering foreign market for the very first time. And for this purpose these companies would have make several decision during this process. Usually, the process of foreign market entry follows different phases. When a company decides to make entry into foreign market, at a first stage if would have to decide which market shout it have to enter. When the particular market is selected then the company would to analyse that what sort of entry mode will be pursued. And at the last stage, the company would have to follow the operationalising of the market process. It has been learned that currently most of Indian software companies have been focused on providing general software development services rather than products. It has also been ascertained that when Western European companies would decide to outsource their projects/services to Indian software companies then they would intend on the utilisation of an offshore development center. it has been examined that certain problems (like differences in efficiency, meeting quality standards and deadlines) could be faced by the Indian software development companies while entering Western European market. It has been intended that there are six characteristics (lower psychical distance, developing relationships, acquiring knowledge about the target market, maintaining relationships with partners, reducing the price of its marketing offerings and determining its asset investment & risks) of marketing strategy that should be followed by Indian software development companies for making successful entry into the Western European market.
Chapter-1: Aims & Objectives
1.1. Background Context
In the relation to the area of software development, India seems to have dominant position around the world. It has been observed that the growth intensity of Indian software development industry is much higher than countries (Niosi & Tschang, 2008). Major reason for this thing is that more and more Indian students have been joining this field for the purpose of attaining better position or career. Most of Indian students believe that this industry would be best preference for them for becoming successful. It has been analysed that salaries in Indian software development industry is very low as compared with other countries and it has been seen that it’s a cost effective option for the foreign companies to outsource its IT (information technology) operations to India. US companies seemed to be well aware about the strengths of Indian IT professionals. It has been estimated that about 30% percent employees worked in the United States larger IT based companies are from India> On the other hand, there has been numerous US companies that have outsourced their projects to the Indian software development companies (Arora et al., 2001).
It has been predicted that Indian IT professionals will progressively employed in the companies of Western European countries. Alternatively, Indian software development will start to target Western European markets. From the perspective of Western European companies, India is an attractive option due to the factor of low cost services Therefore, it has been assumed that Indian software development companies would have to face some challenges and problems while entering Western European markets.
1.2. Motivation
Major motive for selecting this topic is my interest towards the field of marketing. I have great strength over this subject and relevant marketing concepts. Secondly, I have an intension of undergoing research on the Indian market and for this purpose, I choose software development industry because the country has dominant position in this industry. Thirdly, large number of my family members have been employed in this industry and I’m much aware about the current trend of Indian software development industry.
1.3. Research Aims & Objectives
It has been observed that majority of Indian software firms are concentrated only on the US market and due to this fact, this market is now saturated. This aspect direct intension towards the thing that in order to be competitive and sustainable Indian software companies would have to exploit the opportunities available in the new markets. For this purpose, Western European market is seemed to be best option for these companies. Significantly, these companies couldn’t enter Western European market by pursuing their existing practices and it meant that they would have to form new marketing strategies that would enable to enter this market on successful basis. Moreover, it has been ascertained that these companies would face some problems and risks while market entry process. Major factor they would have to focus on is to demonstrate their characteristics and qualities to their potential partners. These companies would have acquire knowledge in this regard. In short, it has been inclined that Indian software companies should have to determine certain characteristics that are vital for them from the perspective of successful marketing strategy. Main aim of this theory into practice report is to identify certain characteristics that would permit Indian software companies to develop successful marketing strategies. Relatedly, this research study also have some objectives that have been outlined below:
- To analyse different modes for entering foreign markets.
- To learn about the current context of Indian software companies in regard to the given industry.
- To discover the specified characteristics of Western European markets.
- To examine certain problems that could be faced by Indian software development companies in Western European market due to the cultural and location differences between India and Western European countries.
1.4. Method
This research project is based entirely on secondary research. For this purpose, the case study approach has been adopted. In regard to accomplish the aims & objectives of this research, a model will be developed about the features of successful marketing strategies for the Indian software companies for entering the Western European market. These characteristics will be found in the literature review section. Additionally for testing the characteristics of this model, a case study of Helios Solutions will be used. The link between the major points of literature review sector and the findings extract from the Helios Solutions case study will be established in the discussion section.
Chapter-2: Literature Review
2.1. Foreign Market Entry Strategies
It seemed to be difficult task for the companies to formulate strategies for entering foreign market for the very first time. And for this purpose these companies would have make several decision during this process. Usually, the process of foreign market entry follows different phases (Agarwal & Ramaswami, 1992). When a company decides to make entry into foreign market, at a first stage if would have to decide which market shout it have to enter (Bell, 1997). When the particular market is selected then the company would to analyse that what sort of entry mode will be pursued (Ojala & Tyrväinen, 2007). And at the last stage, the company would have to follow the operationalising of the market process (Coviello & Munro, 1997). However, all of these stages have been briefly discussed in the next sections.
2.1.1. Market Selection
This is determined as the first stage of foreign market entry process. At this stage, a company needs to evaluate that that either there is an alignment between its formulated strategy with specified markets or not. And if there is perfect market then the company would have examine that which one(s) would be easiest to enter (Moen et al., 2004). According to the research studies on the foreign market entry, there are various factors that are significant for a good market selection. Ojala (2009) ascertained that the companies should select markets based on their relationships. While, Johanson & Vahlne (1977) contended that market selection should be made upon the physical distance between markets. Additionally, there are some more factors that are important for the market selection.
2.1.1.1. Relationship
It is determined as major aspect of decision process in regard to the foreign market selection. This aspect basically exists in either of two forms company’s network relationship or inter-firm relations (Coviello, 2006). Johanson & Vahlne (1990) termed the company’s inter-firm relations as a bridge for entering foreign markets. It has been argued that the company’s internationalisation initiates when it establish relationship with another company which is belong to its network in a foreign market. In relation to the sottware development industry it is inclined as significant factor not only during stage of market selection but also during the stage of company’s entry mode selection (Ojala, 2009). There are many research studies that signifies the importance of network relationship aspect during market selection stage but on the other hand, there are some researchers who opposed this fact. Loane & Bell (2006) had questioned the significance of network relationship by illustrating that a company without having good network relationships still could manage to build new links for the purpose of facilitating its foreign market entry. Similarly, Crick & Spence (2005) argued that companies use their relationships aspect upto some extent during the process of entering new foreign markets (Crick & Spence, 2005).
2.1.1.2. Psychical Distance
Johanson & Wiedersheim-Paul (1975) described psychical distance as a difference countries in term of several aspects (political system, culture, development level and level of education). It had been found out in that research study that companies firstly enter countries with relatively low psychical distance. After having international experience, companies used to enter countries with a greater psychical distance. It had been discovered from the findings of Brewer (2007) that a company’s managers tend more towards market where they would get to know easily and neglect those markets that are hard to get known. It has been argued by Ojala (2008) that the factor of globalisation force companies to enter markets with relatively greater psychical distance. With respect to the software development industry, it has been observed that companies does not always require to enter first the markets with lower psychical distance. Companies in this industry used to follow their domestic partners for entering foreign markets where their partner already have commitments or projects (Bell, 1995).
There are many authors who opposed the significance of this aspect especially during the stage of market selection. According to Hamilla & Gregory (1997), the factor of psychical distance becomes least important due to the communication technologies as it intend global markets to be more homogenous. Coviello & Munro (1997) argued that the factor of psychical relationships no longer remain significant as now the process of companies network relationships used to be created and maintained through Internet. Moreover, this aspect is seemed to be less important especially in the English speaking countries (Poon & Jevons, 1997).
2.1.1.3. Other Factors
In addition to above two factors, it has been inclined that there are other factors that could be vital during market selection process. It has been suggested by Ojala (2008) that intensive market structure and the overall size of specified market are significant aspects from the perspective of knowledge intensive small or medium enterprises (SMEs). On the other hand, Agarwal & Ramaswami (1992) argued that the decision of market selection is made on the basis of given market’s potential and risk investment. In accordance with Johanson & Vahlne (1977), experiential knowledge about target market’s environvironment (involving market structure, culture and customers’ behaviour) is used to be taken into consideration for making market selection. It has been ascertained that experiential knowledge tends to make market entry process easier and also enhance the likelihood of companies’ success. However, this aspect is only useful for the companies that already have international exposure.
2.1.2. Entry Mode
Once the appropriate market has been selected, it would become substantial for the underlying company to choose entry mode for entering specified market. It has been believed that it is generally easy for the company producing tanible products to make selection from the available list of entry modes. But in regard to the software development company, this task is seemed to be hard. However, Coviello & Munro (1997) came up certain entry modes that would be useful specifically for the software development to adopt. All of these modes are briefy discussed below:
a) Distributor: This entry mode is based on the approach of obtaining software when it is ready for sale. For this purpose, the software development company would have to coordinate promotion campaigns and deliver customers with great volume of product. It has been observed that through this entry mode, the company would have direct contact with its customers (McNaughton, 1996).
b) Piggy-Backing: This entry mode follow the context of selling the company’s software in the foreign markets through the marketing channel utilised by the company engaged in the manufacturing of complementary products. In case of software development company, it would sell its product through the channel used or developed by the hardware company (Coviello & Munro, 1997).
c) Joint Marketing Agreement: In accordance with this entry mode, the company would make agreement with the foreign company for marketing each other products through their existing distribution channels. This entry permit companies to offer broad range of products to their customers and it would then increase their existing customer base (Peng, 2013).
d) Development Agreement: In this entry mode, companies from different countries enter an agreement for developing a product together with the use of each other resources and capabilities. With the help of this mode, companies could develop more demanding products and also would reach more customers (Coviello & Munro, 1997)..
e) Joint Venture: This mode of entry incorporate the feature of collaboration between companies in the form of creating new company that would develop and market software in a foreign market (Bell, 1997).
f) Direct Sales: This entry mode is based on the concept of disintermediation. A software development company would sell its products directly to its foreign customers (Ojala & Tyrväinen, 2007).
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