Network and relationship allocation and identification for the Red Bull Company in Thailand

Contents

1. Introduction

2. Thailand - Network Motivation

3. Business Networks & Focal Net

4. Red Bull’s Network Allocation
4.1. Customer Markets
4.2 Referral Markets
4.3 Influence Markets
4.4 Employee (Recruitment) Markets
4.5 Supplier Markets
4.6 Internal Markets

5. Strategic Implications for Red Bull

6. Conclusion

7. References

8. Bibliographies

9. Appendices
I. Appendix A – Thailand Country Profile
II. Appendix B – Thai Functional Beverage Market

1. Introduction

This report critically analyses the network allocation and identification for the Red Bull Company in Thailand, and highlights strategic focal net implications in developing this emerging market. The first part of this report will determine major focal networks in Thailand by applying theoretical models to highlight and categorise the most crucial key market domains Red Bull needs to be connected with, while consolidating a position in the Thai functional beverage market. The second part of this essay aims to identify possible strategic implications, in order to build a solid and long-lasting position in the Thai market while collaborating with its potential network constituents. As business networks are getting increasingly important in today’s fragmented international business environment, networks can be important as a powerful tool for strategic business development (McAuley, 2001) and uncertainty attenuation whilst expanding business operations in foreign countries (Hollensen, 2004).

2. Thailand - Network Motivation

Thailand (see also, Appendix A) is one of the emerging countries in the Asian-Pacific region, which is keen on foreign investment, business networking and collaborations with multinational enterprises. Thailand was a constitutional monarchy until the mostly peaceful military coup ousted the former Prime Minister and replaced the cabinet by an interim government (Business Monitor International, 2007). The military junta has promised democratic elections in October 2007. The Thai Chamber of Commerce enables entrepreneurs and large corporations from different countries to make contracts and interact directly with government agencies, trade associations and international organisations (Business Monitor International, 2007). Thailand has developed strategies to attract foreign companies, MNEs and SMEs, to progress the Thai business landscape and introduced new policies to establish a basis for potential business network developments and collaborations (Salmi, 1999). According to Business Monitor International (2007), the Thai Bureau of Investment intends to reassure foreign investors that the political transition will not affect the country’s investment policies, incentives and services, and hence, has set up a multi-billion-dollar project to improve investment and infrastructure.

Figure 1: Flag of Thailand

illustration not visible in this excerpt

(Source: CIA, 2007)

The Red Bull Company has to consider that business relationships in Thailand are not as formal as those in Japan or China, but not as relaxed and impersonal as in some Western countries (U.S. Department of Commerce, 2007). According to Johnsen (2007), Thai “contractual obligations of the relationships were seen to be less important than the goodwill between parties, demonstrating the particular importance of personal relationships in an Asian business setting” (p.142). This implies that Thailand’s predominantly Buddhist culture (94.6%, according to CIA, 2007) values patience and respect in a business network relationship (U.S. Department of Commerce, 2007). The focal point on interpersonal relationships was identified as a crucial cultural factor when Red Bull is getting involved in, and connected to Thai business transactions in the functional beverage market (see also, Appendix B).

Figure 2: Map of Thailand

illustration not visible in this excerpt

(Source: The Economist Intelligence Unit, 2006)

3. Business Networks & Focal Net

According to Anderson et al. (1994), business networks are “a set of two or more connected business relationships, in which each exchange relation is between business firms that are conceptualized as collective actors” (p.2). It is important for Red Bull to allocate networks initiatives, as those, according to Coviello and Munro (1994), “emanate from opportunities created through network contacts, rather than solely from the strategic decisions of managers in the firm” (p.58). A close and lasting business network of Red Bull to its Thai constituents can provide the organisation with a key marketing strategic opportunity (Gummesson, 1999) to access external resources, “new market contact, and enhance flexibility and market reputation” (McAuley, 2001, p.86). Furthermore, inter-firm relationships with Thai collaborators can provide Red Bull with an opportunity to vanquish physical and cultural distances, due to local trust and commitment building initiatives to domestic suppliers, customers or non-market relationships (Gummesson, 1999). Focal networks are “opaque and unbounded” (Salmi, 1999, p.1376), but offer Red Bull a strategic tool to analyse its position in the Thai functional drink market. According to Salmi (1999), three interrelated determinants must be identified to establish a focal net, i.e. orientation (identification of networks), positioning (in the network) and timing (determine the adequate time to be involved in those networks). All stakeholders affecting Red Bull’s business in Thailand and its strategic locus can therefore be seen as potential focal net constituents. However, establishing business and focal networks are “very time-consuming” (Johanson and Vahlne, 2003, p.92), “enormously complex” in nature (Gummesson, 1999, p.2) and involve an ongoing personal and business learning experience process of all inter-connected stakeholder participants (Johanson and Vahlne, 2003). In the following, Red Bull’s possible focal net in the Thai energy drink market will be developed by applying a theoretical framework to categorise and define the most important inter-organisational relationships.

[...]