PEST Analysis

Comparative Analysis1

COMPARATIVE ANALYSIS ND SELECTION THROUGH STRATEGIC PLANNINGCOMPARATIVE ANALYSIS OF SRILANKA AND MALDIVESWaqas-Ul-Haque(MC130200585)

Virtual University of Pakistan

Dr. Mukhtar AhmedPrinciples of Marketing MGT-301

THE FOREIGN ENTRY PROCESS: A CRITICAL ANALYSISINTRODUCTION

The business world of today calls for expanding sales and profits in order to achieve ever-increasing earnings. Business owners and managers must look for any available opportunities to keep their market share and expand into new markets. What happens when their local market becomes saturated? The savvy leader is inclined to search abroad for any and all potential new markets for their product or service. New markets offer the possibility of increasing total revenue and/or decreasing the costs of goods sold, thereby increasing profits. Entering new markets may also allow a company to follow its existing customers abroad, attack competitors in their home markets, guarantee a continued supply of raw materials, acquire technology or ingenuity, diversify geographically, or satisfy the stockholders desire to expand.

In many cases, with many companies, it is survival. There simply isnt enough domestic demand to keep many firms in business, without going overseas.Once management has made the decision to expand and has determined the target market or markets, the next question is obviously, how. Selecting a mode for entering or expanding in a foreign market is one of the most crucial strategic decisions that can be made by a company. Weighing all factors and choosing the proper mode of entry can result in huge competitive advantages, while making a poor decision can lead to the demise of the company.

COMPANY PROFILE

Inspire Group, ranks among Indias top three private sectors business houses in terms of net worth. The group has business interests that range from telecommunications (Inspire Communications Limited) to financial services (Inspire Capital Ltd) and power generation (Inspire Infrastructure Limited). Inspire Groups leading company, Inspire Communications, is India's largest private sector information and communications company (after Bharti Airtel. Established in 2004), with over 150 million subscribers. It has established high standard and quality in communication and information networks. It statuses among the top 5 telecommunications companies in the world by number of customers in a single country. Inspire Communications Company covering over 24,000 towns and 600,000 villages. Inspire Communications owns and operates the next-generation IP-enabled connectivity infrastructure, comprising over 190,000 kilometers of fiber optic cable systems in India, USA, Europe, Middle East and the Asia Pacific region.SUBSIDIARY COMPANIES

Inspire Communications Ltd. Inspire Capital Ltd. Inspire Infrastructure Ltd.

THE COMPANY PORTFOLIO

Inspire Co. is a famous company working in India for so many years. Inspire Co. has very diversified portfolio and working in different segments. Company has the dynamic work force, capable enough to adjust themselves in different capacities and able to work in any environment. Top management including CEO, Mr. Aakash Bohmani, and all directors has decided to make new office either in Sri Lanka or Maldives.

CRITICAL ANALYSIS BETWEEN SRILANKA AND MALDIVES

On the basis economic and demographic indicators we would find that which country is better for entering into the market.

GEOGRAPHICAL INDICATORS

SRILANKAMALDIVE

Location

Sri Lanka lies on the Indian tectonic plate, a minor plate within the Indo-Australian Plate. It is in the Indian Ocean southwest of the Bay of Bengal, between latitudes 5 and 10N, and longitudes 79 and 82E. Sri Lanka is separated from the Indian subcontinent by the Gulf of Mannar and the Palk Strait.Maldives, officially the Republic of the Maldives and also referred to as the Maldive Islands, is an island nation in the Indian Ocean consisting of a double chain of twenty-six atolls, oriented north-south, that lie between Minicoy Island (the southernmost part of Lakshadweep, India) and the Chagos Archipelago.

Geographic coordinates

7 00 N, 81 00 E3 15 N, 73 00 E

Area

Total: 65,610 sq kmTotal: 298 sq km

Climate

tropical monsoon; northeast monsoon (December to March); southwest monsoon (June to October)tropical; hot, humid; dry, northeast monsoon (November to March); rainy, southwest monsoon (June to August)

Natural resources

limestone, graphite, mineral sands, gems, phosphates, clay, hydropowerfish

Environment - current issues

Deforestation; soil erosion; wildlife populations threatened by poaching and urbanization; coastal degradation from mining activities and increased pollution; freshwater resources being polluted by industrial wastes and sewage runoff; waste disposal; air pollution in Colombo.Depletion of freshwater aquifers threatens water supplies; global warming and sea level rise; coral reef bleaching.

ECONOMIC INDICATORSSRILANKAMALDIVE

Sri Lanka continues to experience strong economic growth following the end of the 26-year conflict with the Liberation Tigers of Tamil Eelam (LTTE). The government has been pursuing large-scale reconstruction and development projects in its efforts to spur growth in war-torn and disadvantaged areas, develop small and medium enterprises and increase agricultural productivity. The government's high debt payments and bloated civil service have contributed to historically high budget deficits, but fiscal consolidation efforts and strong GDP growth in recent years have helped bring down the government's fiscal deficit. However, low tax revenues are a major concern. The 2008-09 global financial crisis and recession exposed Sri Lanka's economic vulnerabilities and nearly caused a balance of payments crisis. Growth slowed to 3.5% in 2009. Economic activity rebounded with the end of the war and an IMF agreement, resulting in two straight years of 8% growth in 2010-11. Growth moderated to about 6% in 2012. Agriculture slowed due to a drought and weak global demand affected exports and trade. In early 2012, Sri Lanka floated the rupee, resulting in a sharp depreciation, and took steps to curb imports. A large trade deficit remains a concern. Strong remittances from Sri Lankan workers abroad have helped to offset the trade deficit.Tourism, Maldives' largest economic activity, accounts for 28% of GDP and more than 60% of foreign exchange receipts. Fishing is the second leading sector, but the fish catch has dropped sharply in recent years. Agriculture and manufacturing continue to play a lesser role in the economy, constrained by the limited availability of cultivable land and the shortage of domestic labor. Lower than expected tourist arrivals and fish exports, combined with high government spending on social needs, subsidies, and civil servant salaries contributed to a balance of payments crisis, which was temporarily eased with a $79.3 million IMF Stand-By agreement. However, after the first two disbursements, the IMF withheld subsequent disbursements due to concerns over Maldives' growing budget deficit, and the government has been seeking other sources of budgetary support ever since. New Goods and Services Tax (GST) on tourism introduced in January 2011, on general goods and services in October 2011, and a new Business Profit Tax introduced in July 2011 have provided a boost to revenue. Economic growth slowed to 3.4% of GDP in 2012, compared to 7.0% in 2011 because of slower tourist arrivals and weak global conditions. Diversifying the economy beyond tourism and fishing, reforming public finance, increasing employment opportunities, and combating corruption, cronyism, and a growing drug problem are major near-term challenges facing the government. Gross foreign reserves at the end of November 2012 were approximately $356 million, compared with $326 million in 2011, and were sufficient to finance only 2.6 months of imports. Over the longer term Maldivian authorities worry about the impact of erosion and possible global warming on their low-lying country; 80% of the area is 1 meter or less above sea level.

GDP (purchasing power parity):

$125.3 billion (2012 est.)$2.974 billion (2012 est.)

GDP (official exchange rate):

$59.2 billion (2012 est.)$1.537 billion (2012 est.)

GDP - real growth rate:

6% (2012 est.)3.4% (2012 est.)

GDP - per capita (PPP):

$6,100 (2012 est.)$8,700 (2012 est.)

GDP - composition by sector:

agriculture: 12%agriculture: 3%

industry: 30.1% industry: 17%

Services: 57.9% (2012 est.) Services: 80% (2012 est.)

Labor force - by occupation:

agriculture: 31.8%agriculture: 11%

industry: 25.8% industry: 23%

Services: 42.4% (June 2012) Services: 65% (2006 est.)

Unemployment rate:

4.5% (2012 est.)28% (2012 est.)

Population below poverty line:

8.9% (2010 est.)16% (2008)

Taxes and other revenues:

13.7% of GDP (2012 est.)41.5% of GDP (2012 est.)

Inflation rate (consumer prices):

9.2% (December 2012)5.1% (2012 est.)

Industries:

processing of rubber, tea, coconuts, tobacco and other agricultural commodities; telecommunications, insurance, banking; tourism, shipping; clothing, textiles; cement, petroleum refining, information technology services, constructiontourism, fish processing, shipping, boat building, coconut processing, woven mats, rope, handicrafts, coral and sand mining

Exports:

$10.51 billion (2012 est.)$283 million (2012 est.)

Imports:

$19.08 billion (2012 est.)$1.406 billion (2012 est.)

DEMOGRAPHIC INDICATORSSRILANKAMALDIVE

Ethnic groups

Sinhalese 73.8%, Sri Lankan Moors 7.2%, Indian Tamil 4.6%, Sri Lankan Tamil 3.9%, other 0.5%, unspecified 10% (2001 census provisional data)South Indians, Sinhalese, Arabs

Languages

Sinhala (official and national language) 74%, Tamil (national language) 18%, other 8% note: English, spoken competently by about 10% of the population, is commonly used in government and is referred to as the link language in the constitution Dhivehi (official, dialect of Sinhala, script derived from Arabic), English (spoken by most government officials)

Religions

Buddhist (official) 69.1%, Muslim 7.6%, Hindu 7.1%, Christian 6.2%, unspecified 10% (2001 census provisional data)Sunni Muslim (official)

Population

21,675,648 (July 2013 est.)393,988 (July 2013 est.)

Population growth rate

0.89% (2013 est.)-0.11% (2013 est.)

Urbanization

Urban population: 14% of total population (2010)urban population: 40% of total population (2010)

Rate of urbanization: 1.1% annual rate of change (2010-15 est.) Rate of urbanization: 4.2% annual rate of change (2010-15 est.)

Literacy

definition: age 15 and over can read and writedefinition: age 15 and over can read and write

total population: 91.2% total population: 93.8%

male: 92.6% male: 93%

female: 90% (2010 census) female: 94.7% (2006 Census)

TELECOMMUNICATION INDUSTRY

SRILANKA MOBILE NETWORK OPERATOTRS

As of December 2012, the penetration rate in Sri Lanka was estimated at 100% over a population estimate of over around 20.3 million.

RankOperatorSubscribers

(in millions)

1Dialog7.8[112] (December 2012)

2Mobitel4.2[113] (July 2011)

3Etisalat4.0[114] (Feb 2012)

4Airtel1.7[115] (January 2013)

5Hutch0.899[116] (4Q 2009)

Sri Lanka - key telecom parameters 2011 - 2012Category20112012 (e)

Fixed-line services

Total number of subscribers3.61 million3.60 million

Internet

Total number of subscribers (fixed)509,000600,000

Mobile services

Total number of subscribers18.3 million20.0 million

The highly competitive mobile market in Sri Lanka had been running with a healthy overall annual growth rate for some years. With mobile penetration is still relatively low compared with other more developed Asian markets, having reached 91% by mid-2012, the strong annual growth of earlier years has moderated somewhat and was continuing at a very modest 10%. The market has undoubtedly benefited from its liberalisation and the competition that came with four operators seriously battling it out for market share. This is despite one of these Dialog Telekom still clinging to a large slice (still around 40%) of the market. The number of mobile operators increased to five with Bharti Airtel Lanka launching a mobile service in 2009. Bharti hit the market hard; signing up one million subscribers in just six months but by 2012 had lost considerable momentum and had been losing customers. This report presents an overview of mobile phone services in Sri Lanka. The countrys TV broadcasting sector is also briefly reviewed.MALDIVES MOBILE NETWORK OPERATOTRS

As of March 2011, the penetration rate in Maldives was estimated at 116.456% over a population estimate of around 0.4 million.

RankOperatorSubscribers

(in millions)

1Dhiraagu0.185[82] (March 2007)

2Wataniya Maldives0.102[83] (Q1 2010)

Maldives - key telecom parameters 2012 2013

Category20122013 (e)

Fixed-line services

Total number of subscribers24,20024,000

Internet

Total number of fixed subscribers19,50019,000

Total number of mobile broadband subscribers69,600200,000

Mobile services

Total number of subscribers560,500600,000

LOGICAL RECOMMENDATIONOn the basis of above facts and figures, economic growth, GDP (per capita), attracted tourism sites, telecommunication policies, telecommunication infrastructure, market penetration and overall economic growth going with MALDIVES and this would be the recommendation. MARKET HIGHLIGHTS IN FAVOR OF MALDIVES

The Maldives continues to benefit from its newly competitive market, with overall service improving greatly since the arrival of second mobile operator Wataniya Telecom; Mobile penetration had reached 175% at the start of 2013;

Stronger growth in the national economy in 2011 provided encouraging signs for the future and suggesting further growth opportunities for the telecom sector; however, 2012 saw the economy slip backwards again and the forecasts for 2013 remained gloomy.

CONCLUSION

With its relatively small people of less than 350,000 living on a lot of islands across the archipelago, providing good communications for the Maldives has been paramount. The country has addressed this challenge with considerable success, and now prides itself on having built of the majority advanced telecommunications systems in the region, according to Research & Markets. Despite the slow start, the introduction of a level of competition quickly saw a boom in the countrys telecom market. Mobile penetration in the Maldives had reached a remarkable 175% by the start of 2013. REFERENCES www.partnersinternational.comhttp://www.partnersinternational.com/articles/foreign-market-entry.html Srilanka, (2012) The World Factbook.

https://www.cia.gov/library/publications/the-world-factbook/geos/ce.html Maldives, (2012) The World Factbook.

https://www.cia.gov/library/publications/the-world-factbook/geos/mv.html Wikipedia

http://en.wikipedia.org/wiki/List_of_mobile_network_operators_of_the_Asia_Pacific_region#Maldives Wikipedia

http://en.wikipedia.org/wiki/List_of_mobile_network_operators_of_the_Asia_Pacific_region#Sri_Lanka Budde.com (2012)

http://www.budde.com.au/Research/Maldives-Telecoms-Mobile-and-Broadband.htmlhttp://www.budde.com.au/Research/Sri-Lanka-Telecoms-Mobile-Broadband-and-Forecasts.html