International Marketing Assignment: Internationalization Of Softwire In Germany

Question

Task: A small or medium (SME) UK manufacturing company is considering expanding into mainland Europe (One EU country) in June 2022.
Write a well-researched international marketing assignment identifying and critically evaluating the 4 most immediate factors of the macro business environment it must take into account when assessing the decision to internationalize or not
You must use examples and academic models to illustrate your answer.

Answer

Introduction
Focusing on the examination of both external and internal market environment analysis is crucial in the segment of expanding the business or penetrating a new market place from the international level. Business expansion critically has the potential to expose the services along with products to a vast audience. Enhancing an organization’s consumer base would support that specific company to convert more consumers including that to improve their sales rate and financial expenses. Expanding business into some other country can help that organization to generate higher profit rates and consumers are extremely important in order to bring success in business. Softwire can be considered as a privately-owned company for software development that is situated in London. This software developing country is trying to expand their business in Germany, and therefore, is it necessary for Softwire London, U.K to critically analyze the market condition of Germany. In order to critically analyze the external and internal environment of the market, PESTLE and SWOT analysis have been incorporated, including that Porter Five Forces has also been implemented in this study effectively.

Analyzing internal and external environment
PESTLE analysis
Political
In case a business organization is trying to expand their business and willing to extend their consumer base then analyzing whether the political stability is favorable or not favorable is extremely important. It can be stated that the political condition of Germany is mostly favorable and this place is a democratic place (Klinke, 2018). The average value of this place amidst the last few years’ period was 0.87 points including a minimum of 0.57 points in the year of 2019. Therefore, it can be illustrated that it would be easier for any business organization to expand their business in Germany as that place has more political stability. Moreover, this firm can expand their business marketing area across Germany by the end of 2022 due to a stable political environment of the nation.

Figure 1: Political stability index of Germany
(Source: Klinke, 2018)

Economic
The economy of this aforementioned place can be considered as the higher evolved social marketing economy. Germany can be recognized as the most significant industrialized country that is situated in Europe. The place has a real GDP of approximately US$3,740.9 billion and this place has the 16th highest GDP rate per capita as compared to 149 other countries in the year 2019 (Statista, 2021). The social marketing economy of Germany can be considered as the largest worldwide, and this place is continuously trying to thrive. GDP of Germany per capita has stood at approximately 46, 215 U.S dollars in the year of 2020 including that this has been forecasted towards exceeding upto 60,000 US dollars by the year of 2025 (O’Neill, 2021). In the year of 2017 Germany has ranked in the top 20 countries in the globe including the increased GDP per capita. Therefore, it can be stated that as GDP of Germany is in the higher stage, it would be beneficial for any business organization. It is obvious that before opting for internationalization it is extremely necessary to critically analyze the economic condition of the place in which the business organization is willing to start their business (Christodoulou and Cullinane, 2019). Considering the above-mentioned scenario, it can be concluded that Germany is more economically favorable for doing business as Softwire can expand their business on that region for better market growth and expansion.

Figure 2: GDP of Germany per capita
(Source: O’Neill, 2021)

Social
As of the year 2020, the basic Germany’s average wages annually was approximately 42.5 thousand Euros every year and in comparison, to the previous years, it can be stated that the annual wages have been increased in the last five years (Clark, 2021).

Figure 3: Annual wages rate in Germany
(Source: Clark, 2021)

In the year of 2020, it can be stated that there were near about 726 thousand and above German households along with a household-based net income of underneath 500 euros every month (Koptyug, 2022). In addition to this, the household majority had a per month incoming rate of 1500 to 2000 euros.

Figure 4: Household income of Germany
(Source: Koptyug, 2022)

The below statistics reflect that the employment rate in Germany from the year of 2012 up to 2020 has been effectively favorable. In the year of 2020, approximately 41.74 million people will be employed in Germany (O’Neill, 2021).

Figure 5: Employment rate in Germany
(Source: O’Neill, 2021)

According to statistics, the evolution of population rate or other numbers in the place called Germany from the year 1990 up to 2020 (Koptyug, 2021).As the social factors are compatible for retaining a huge number new and potential customers from the market, though, Softwire can expand their market in Germany by the year of 2022. In addition to that, the population rate in Germany, mainly in December of the same year has been estimated at about 83.16 million. On the other side it can be stated that the above factors that have been mentioned in social factors of Germany, in case any business organization would develop their business in Germany then it would get major benefits in return.

Figure 6: Development of population rate in Germany
(Source: Koptyug, 2021)

Technological
In the year of 2020, the share of internet users in Germany has been estimated towards approximately 88%, an enhancement in comparison to the past years as it was 86%. In addition, this share of internet users has continuously been increasing in the current year. As per the current population rate of Germany that generally stands at nearly 83 million and of this higher rate of users is recognized as the most significant (Koptyug, 2021). It is also predicting that the future trend of digitalization including internet activity would increase in this place. Therefore, doing online business would be beneficial for any business organization.

Figure 7: Internet usage rate in Germany
(Source:Koptyug, 2021 )

The estimation of smartphone users rate in Germany has just increased in recent years, estimating up to 62.6 million smartphone owners in Germany in the year of 2021 (Koptyug, 2021). The mobile phone users rate in Germany was 6.3 million, which was too low than the previous years and as the smartphone users rate has increased then it would be easier for consumers to get software or other products more easily through online.

Figure 8: Mobile phone users rate in Germany
(Source: Koptyug, 2021)

Legal
Business act of 2016, employment law and worker's right protection has been implemented in different industries all over this country. As an effect to this, a business firm such as Softwire London U.K. can expand their business along with maintaining their workplace culture and the level of sustainability. However, legal support can be obtained from this nation in the requirement of expanding the organizational business marketing area with more credibility and efficiency. Moreover, it can be stated that this business firm can gain a wide number of beneficial factors in terms of gaining a desired volume of business integration in a significant way (Khalid and Rahman, 2019). Hence, it is crucial to mention that this firm can obtain a huge volume of advantages due to the rules, regulations and laws that have been implemented in this nation. Therefore, the legal environment in this nation can be determined as compatible for a greater customer base expansion throughout a better internationalization.

Environment
Germany has numerous pollution issues and people of Germany are mainly suffering from air pollution issues. The number of deaths due to air pollution, mainly in Germany, has critically decreased significantly from the year of 1990 (Tiseo, 2020). The air pollution rate has dropped from about 65,000 up to 29,300 by the year of 2019 and however, this has been enhanced from the past years. The estimation of deaths caused through particle pollution (PM 2.5) mainly in Germany has decreased slightly from 2011, decreasing up to 63,000 by the year of 2018. In Spite of this reduction, Germany was in the highest estimation of deaths that had been caused through P.M particulate matter over the whole EU in the year 2018 (Tiseo, 2020). On the other side, at the timing of comparison towards the overall estimation of deaths in this country, this had been a miniature ratio at the timing of comparison to countries mainly in Bulgaria. Therefore, it can be concluded that, the environment of Germany is not favorable for starting a business or maintaining sustainability in business organization.

Porter Five Forces
Threat of latest entrants
It is obvious that, it can be easier to give equal competition to any small software company through online mode, it is not impossible to take on a company such as Softwire. In the German market there are numerous software developing companies that are evolving in this market segment. It can be more difficult for this software developing company to shine and in order to decrease their threats of new entrants the organization needs to be more unique (Isabelle et al. 2020). Therefore, it can be stated that for this software developing country the threat of new entrants is in the higher state.

Substitutes threat
The threat for substitution can be considered as the major portions of marketing in this new market as the Germany market contains some heavyweight organizations and those organizations are having greater marketing share. As an SME Software can find it more difficult to compete in this market. It is necessary for Softwire to critically monitor their competitors and their size along with their capital before making the pricing structure and other planning. Effectively introducing the product, including uniqueness of services, can be beneficial for the company (Wellner and Lakotta, 2020). On the other hand, crucially analyzing the horizontal threat might create greater value regarding the software developing organization. Considering the analysis, it is indicating that the organization needs to pay heed to consumer experience in order to attain major success in the software industry.

Buyer’s bargaining power
Softwire companies increasingly emphasize consumer satisfaction, including that it is aiming at giving higher value towards their consumers. The company mainly provides a consumer-focused approach in their software development business and they provide guarantees that the organization’s products are of higher quality. The business organization is providing their main focus upon the fact that consumers are getting their products on time or not. Consumers have sensitiveness regarding the price related factors and in case the organization is not giving best quality products in the best price range then automatically they would go to some other substitutes in the market. Consumers of this organization have higher bargaining power regarding the software related products due to the availability of higher competition including substitute products. Therefore, depending upon the analysis of Softwire, the organization needs to provide major importance towards their consumers in terms of maintaining success in this lengthy run.

Supplier’s bargaining power
It has been effectively viewed that these pre-existing competitors mainly offer some lower quality of services along with products at a lofty pricing range as the requirements about security approaches are lofty in Germany. In addition to this, this information has made a greater aid for Softwire, the organization can effectively focus upon their pricing strategy only. The appropriate implementation of product and service quality at a budget friendly price might support the business organization to make a brand image in this market of Germany. Suppliers generally give Softwire the products that they desire for their software business. In case Softwire is selling their products whose suppliers are mainly in miniature proportion, then the supplier’s power would enhance automatically, as there is low competition between the suppliers. Therefore, depending upon the above analysis of Softwire, the external attributes reflect that supplier are having lower towards moderate power in this industry.

Competitive rivalry
It can be considered that as the most basic determinants there the major focus lies upon the competition including profitability. This supports the organization to understand the preexisting forces of competitors through the market. In addition, it is not just supported in determining the rivalry though on the other side it also supports in identifying the benefits of those organizations and the exact procedure through which it can be used in the strategy of marketing (Khurram et al. 2020). In case the software developing country is focusing upon providing better quality products then the business company would stay one step ahead from their competitors.

Figure 9: Porter Five Forces
(Source: Khurram et al. 2020)

In order to gain more consumer base and to attract new consumers in the market, the software developing company needs to present their brand image and their brand persona as compared to their rivals. The above-mentioned software developing companies need to do internal and external analysis effectively as with support of this analysis the business organization would gain a detailed understanding about the preferences, desires of consumers regarding products and services. As an effect to this, the business firm named as Softwire London can focus upon their product development and determine suitable and eligible ways for offering services to their consumers.

The requirement of getting a detailed and explained overview about the process of new marketing mix penetration needs to be used in this study. The 4P’s of marketing can be recognized such as product, promotion, place and price; all these are sometimes considered to be the marketing mix (Thabit and Raewf, 2018). All of these are the major key components that are involved in this marketing and services and they effectively interact with each other. The marketing strategy can be considered as the most essential thing particularly for a business organization in order to dominate this competitive market and to survive in this market. In addition, it is becoming more necessary for business organizations to opt for internationalization.

Product
Softwire is renowned for their consumer services as they are continuously focusing upon the evolution of services as per the necessities of consumers. In addition to this as the business organization is dealing with other big organizations, Softwire has got a massive timing for and monitoring the complexities of other organizations related to this organization and creating the appropriate solution upon the vast scale. On the other side, the company has numerous rivals in the companies, therefore, in the basis of product the company needs to be more innovative and unique regarding their products then consumers would automatically opt for their products. On the other hand, the business organization should target young people who have more interest in software products, then it will be easier for the organization to sell their products in an effective manner (Sudari et al. 2019). The organization should focus upon their sustainability, product packaging and right time services as these things are the main priority for several consumers. In order to gain more competitive advantage, the organization needs to change their packaging, warranties, after sales related services or else extend the latest markets in terms of meeting the business company’s objectives.

Figure 10: Marketing Mix 4P’s
(Source: Thabit and Raewf, 2018)

Price
The price range of a product straightforwardly influences the business profits along with the sales volume. It has been mentioned above the price range is the most sensitive part of any consumer and they generally want better quality of products at a low pricing range. If the business organization is following this pricing strategy, then it can provide major benefits to them as other companies are trying to sell products in a higher range (Bruskova, 2019). As a result, the consumer would automatically come to this business organization due to their lower pricing range. On the other hand, in order to gain the attention of consumers they need to provide some graeter discounts on software products and a significant discount would gain the attention of customers. Demand, price and trends of pricing between rivals and government regulations are critical attributes that support an organization to determine their pricing range.

Place
Place comprises selecting the area where their products and services are needed to create more availability regarding sale. Placement along with distribution of these two components are required parts of this marketing mix strategy. The business organization needs to effectively distribute the right products in the right place that is easily accessible to their customers. In case consumers can get these software products easily near their hand then they would be more dependable on these products. Therefore, it can be stated that the business organization should focus on choosing the accurate marketers when selling their software related products.

Promotion
Promotion can be considered as the marketing communication system that helps the business firm towards publicizing their software products and its factors to their customers. Softwire should be effectively promoting their software products as per the preferences of the local community. In addition to this, advertising, the most effective and fundamental component of promoting software products and doing advertisement through online, is more suitable for the business organization. Those product related advertisements need to be more eye-catching and through these advertisements consumers would easily get brief details about the products. Thus, It is important for the business organization to concentrate on advertisement about their software products better than their rivals and advertisement can attract a large estimation of consumers at a time (Pepels, 2021). The above-mentioned business companies should adopt few strategies for their promotion. Product sales and doing publicity is extremely necessary to gain more competitive advantage and consumer base.

Conclusion
In order to do internationalization, it is necessary to critically analyze the internal and external factors of a business market segment. The software business organization named as Softwire wants to expand their business in the German market segment. Therefore, PESTLE analysis has been incorporated in this research study. On the other side, in this research study Porter five Forces and swot analysis have been incorporated in Thai research work effectively. In order to gain more customer base along with that in order to attract the latest consumers in this market, this software developing organization should represent their brand image and their brand persona in comparison to their competitors. The business organization known as Softwire can be critically concentrated on their product development along with determining suitable and effective paths in order to offer services towards their consumers.

Reference List
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