Академический Документы
Профессиональный Документы
Культура Документы
:
Market Entry Plan - Taiwan
Student Name
Course Details: Name, Number, and Section
Dr. Ziad Swaidan
Date of the assignment
Table of Contents
1.2 Executive Summary ........................................................................................................ 2
1.3 Taiwan: An Introduction ................................................................................................ 3
1.4 Netflix, Inc.: Company Background............................................................................... 3
2.0 Global Macro Environmental Analysis: Online Video Streaming..................................... 4
2.1 PEST Analysis: Taiwan .................................................................................................. 4
2.2 Political Environment, Rules & Regulations .................................................................. 4
2.3 Economic Environment .................................................................................................. 5
2.4 Society and Culture ........................................................................................................ 6
2.5 Technological Environment ........................................................................................... 7
2.6 Opportunities and Threats .............................................................................................. 7
3.0 Global Competitive Analysis: Online Video Streaming .................................................... 9
3.1 Competitive Analysis: Taiwan ....................................................................................... 9
3.2 Identification of Primary Competitive Threat .............................................................. 10
3.3 Identification of Additional Competitive Threats ........................................................ 11
4.0 Entry Strategies: Options for Taiwanese Market ............................................................. 12
4.1 Identification of Market Entry Options ........................................................................ 12
4.2 Recommendation of Market Entry Strategy ................................................................. 13
5.0 Market Analysis and Segmentation: Netflix, Inc. in Taiwan ........................................... 13
6.0 Marketing Mix Strategies: Taiwanese Market ................................................................. 13
6.1 Product Strategy ........................................................................................................... 13
6.2 Price Strategy................................................................................................................ 13
6.3 Promotion Strategy ....................................................................................................... 14
6.4 Place Strategy ............................................................................................................... 14
7.0 References ........................................................................................................................ 15
market cap of $17.9billion. It employs over 2,000 full-time workers and is headquartered in Los
Gatos, CA.
(2nd), Malaysia (6th), and South Korea (7th) achieved higher results on the scale. The 10
dimensions of the World Banks DB analysis as measured against conditions in Taiwan are
reflected in Table 1 below. As shown, Taiwan has made improvements in all but 3 categories
versus 2013 rankings.
Table1: Ease of Doing Business 2014: Topical Ranking Data for Taiwan
Topic
DB 2014 Rank DB 2013 Rank
Starting a Business
17
15
Dealing with Construction Permits
7
6
Getting Electricity
7
6
Registering Property
31
31
Getting Credit
73
71
Protecting Investors
34
32
Paying Taxes
58
56
Trading Across Borders
18
18
Enforcing Contracts
84
85
Resolving Insolvency
16
15
(Source: World Bank, 2013)
Change in Rank
-2
-1
-1
No change
-2
-2
-2
No change
+1
-1
Opportunity: Strong trade relationship with the United States. The United
States is Taiwans third largest trading partner. As of 2011, the country exported
10.8% of its net outgoing goods and services to the United States and accepted
10.1% of their total imports from same (U.S. Commercial Service, 2011).
Threat: Delicate political relationship with China. The fact that China lays
claim to Taiwanese territory, coupled with the knowledge that not all nations
recognize Taiwans sovereignty is possible cause for concern. Should a firm
invest in ROC operations, the arrangements made with the government of Taiwan
could feasibly be nullified following a concerted effort made by PRC to reclaim
direct control over the territory. The possibility of PRC expropriation of
organizations erected without their influence and oversight should remain top of
mind for those wishing to conduct FDI in Taiwan.
growth puts the nation in a competitive position as an outlet for foreign direct investment, as
their ability to demonstrate consistency in economic expansion is reflective of the fortitude of
Taiwans economy.
Figure 1: Percent Change, Taiwan Annual GDP Growth Rate
individualism and masculinity. Their collectivistic culture finds them forging strong, life-long
bonds with both family and peers.
Opportunity: Societal appreciation for American goods. Having visited the
country in 2012, I was fortunate enough to witness the general appreciation for
goods from the United States and Americanism first-hand. A 2012 Boston
Consulting Group study concluded that Chinese consumers are willing to pay
premium prices of between 10 and 80% to consume American goods and
although the observations were made of PRC consumptionsimilarities between
the two cultures allow researchers to draw similar conclusions for the ROC
market (Forbes, 2012).
Threat: Comparatively laggard adoption of new products. The collectivistic
nature of Taiwans people finds that early adopters are few, and aggregate
adoption of products newly introduced in the market requires proliferation of
recognized quality. This attitude typically originates with respected persons
within social circles (in-country early adopters) and propagates slowly. Market
entrants must accordingly remain patient with measurements of attach rate, which
can lead to sluggish return on investment.
2.5 Technological Environment
Taiwan is a recognized global leader in integrated circuit manufacturing, including
components and final products related to PCs, LCDs, LEDs, mobile phones, solar cells,
motherboards, and more. From a consumer perspective, their advanced telecommunications
networks and high proliferation of connected devices makes the country adequately situated for
targeting by technology firms whose service offerings depend on these platforms for
deployment.
Opportunity: High saturation of connectivity. The United Nations
Telecommunication Development Sector estimated that the percentage of
Taiwanese people with internet access was 75.99% as of 2012 (ITU). For
comparison, the same research concluded that usage in the United States of
America sat at 81.03% for the same period (ITU, 2012). This widespread internet
accessibility permits the copious number of firms utilizing web connectivity to
deliver services a well-established audience of consumers in Taiwan.
Threat: Proliferation of copyright infringement. According to the U.S.
Commercial Service, American firms have remained cognizant of infringement of
intellectual property rights by Taiwan and its citizens for some time now, and
internet-based piracy by individuals, corporations, and educational institutions
alike continues to be problematic (2011). Although the situation continues to
improve, companies with electronic products that is easily replicated (e.g.
software and electronic books) should take the necessary steps to protect their IP.
The U.S. Commercial Service has outlined recommended procedures in their
publication Doing Business in Taiwan.
2.6 Opportunities and Threats
A PEST analysis has uncovered several factors that Netflix should take into consideration
both before considering expansion into Taiwan, and as they form their go-to-market plan moving
forward. These findings are summarized below.
2.6.1 Opportunities
Three circumstances stand out as being the most advantageous opportunities for a
Netflix, Inc. expansion into Taiwan.
1. Admirable GDP per capita. Although Taiwan globally ranks 30th in the GDP per
capita comparison, the only three Asia-Pacific nations outranking the country are Hong
Kong, Brunei and Singapore (CIA, 2013). This puts Taiwan in a strategically sound
position for the introduction of consumer goods to the Asian market(s), as the disposable
income enjoyed by its inhabitants likens the degree of product sampling.
2. Societal appreciation for American goods. Having visited the country in 2012, I was
fortunate enough to witness the general appreciation for goods from the United States and
Americanism first-hand. A 2012 Boston Consulting Group study concluded that
Chinese consumers are willing to pay premium prices of between 10 and 80% to
consume American goods andalthough the observations were made of PRC
consumptionsimilarities between the two cultures allow researchers to draw similar
conclusions for the ROC market (Forbes, 2012).
3. High saturation of connectivity. The United Nations Telecommunication Development
Sector estimated that the percentage of Taiwanese people with internet access was
75.99% as of 2012 (ITU). For comparison, the same research concluded that usage in the
United States of America sat at 81.03% for the same period (ITU, 2012). This
widespread internet accessibility permits the copious number of firms utilizing web
connectivity to deliver services a well-established audience of consumers in Taiwan.
2.6.2 Threats
No entry into a foreign market is a leisurely experience, and as such should take into full
consideration the existence of several threats discovered using a PEST analysis. The three most
influential threats to a Netflix, Inc. expansion into Taiwan are summarized below.
1. Delicate political relationship with China. The fact that China lays claim to Taiwanese
territory, coupled with the knowledge that only a handful of nations recognize Taiwans
sovereignty is possible cause for concern. Should a firm invest in ROC operations, the
arrangements made with the government of Taiwan could feasibly be nullified following
a concerted effort made by PRC to reclaim direct control over the territory. The
possibility of PRC expropriation of organizations erected without their influence and
oversight should remain top of mind for those wishing to conduct FDI in Taiwan.
2. Proliferation of copyright infringement. According to the U.S. Commercial Service,
American firms have remained cognizant of infringement of intellectual property rights
by Taiwan and its citizens for some time now, and internet-based piracy by individuals,
corporations, and educational institutions alike continues to be problematic (2011).
Although the situation continues to improve, companies with electronic products that is
easily replicated (e.g. software and electronic books) should take the necessary steps to
protect their IP. The U.S. Commercial Service has outlined recommended procedures in
their publication Doing Business in Taiwan.
3. Dependence upon PRC for economic solvency. The Peoples Republic of China
represents Taiwans top ranked target for FDI activities. This fact, coupled with the idea
that China is ROCs number one trading partner (29% of total trade as of 2010) makes
the country susceptible to severe economic disruption should political relations with
mainland China dissolve.
10
Amazon.com: Strengths
1.
Netflix: Weaknesses
1. Burdensome Debt and Limited Cash Flow
Early in 2013, Standard & Poors altered its outlook on
Netflix speculative BB-minus level debt to negative,
citing declining cash flow levels between this year and
next, the firms increased propensity to leverage debt,
and risks associated with original programming. The
companys stated intention to increase a debt-backed
commitment to their streaming footprint is cause for
concern, as decreasing cash reserves reported in 2012
are actually reflective of an inability to obtain additional
debt to finance acquisitions, capture business
opportunities, and meet capital expenditure or other
capital requirements in the future.
2. Weakening Firm Profitability
Despite its ability to outpace analyst forecasts for share
prices, Netflix has recently exhibited declining
profitability. Fiscal year 2012 saw a decrease of 86.71%
in operating profit from 2011, mainly due to increases in
operating costs as a percentage of sales. Further, the firm
reported operating margin of 1.39% in 2012 compared
with 11.74% in 2011. Should Netflix be ineffective in
demonstrating success with its growth forecasts
profitability may further wane, resulting in displeased
investors and declining company value.
3. Decline of the Domestic DVD Segment
Although the Domestic DVD segment vaulted Netflix to
common recognition as the major player in subscriptionbased television and movie content delivery,
subscriptions to the physical disc distribution service
have continued to decline in recent years. The firms
commitment to investing in new content creates an
additional financial commitment by default, as they must
acquire additional assets as quickly as new movies are
released.
11
Amazon.com: Weaknesses
1.
12
Vudu Vudu offers users the ability to purchase or rent movies and television shows
starting at 99 cents each, and was recently acquired by Wal-Mart. They tout competitive
advantage in their claim to deliver streaming content the very day its released to DVD; a
marked difference in the turnaround time of up to one year typically seen by Netflix
subscribers. As was the case with both Amazon and Hulu, who would fill a primary and
secondary competitor role, respectively, if our analyses rendered such a decision Vudu
would fill the tertiary spot.
HBO GO HBO developed its GO service to stream their in-house television series, as
well as licensed movies. As of now they only offer 244 movie titles in addition to 47
series and a handful of comedy and sports recordings, so their content lineup is paltry
compared to the Netflix library.
Apple iTunes Apple began offering movies and television shows for purchase and
download to compatible devices in 2005, and capitalizes on the broad user base the
company enjoys for their mobile devices.
Google Play Much like Apple iTunes, the Google Play store allows its users to
purchase or rent movies and television shows. The service should be viewed as a direct
competitor to Netflix due to overlap of content offering, but thus far Google appears to
have fleshed out their library as more of a fringe value-add to their Google Play
marketplace rather than assemble a concerted effort to cannibalize Netflix viewership.
YouTube This behemoth of online video content is primarily driven by user-supplied
uploads, but some full-length films are also legally available for streaming. Although
this does not parallel the service offering of Netflix, their existence cannot be ignored;
particularly in the event they choose to modify their business model to take advantage of
their large-scale delivery infrastructure and offer services that compete with Netflix in the
future.
13
Outright Investment This strategy would find Netflix performing direct foreign
investment in the Taiwanese market by acquiring the content rights and equipment necessary to
duplicate their US operations overseas.
4.2 Recommendation of Market Entry Strategy
Netflix, Inc. should adopt an outright investment strategy in Taiwan by acquiring the
content rights and equipment necessary to duplicate their US operations in the market. The
firms liquidity situation affords them the ability the flexibility of capital expense necessary to
undertake the investment, and doing so will ensure that the firm reaps the maximum benefits of
profitable success in the new venture.
14
Blu-Ray disc-by-mail services. Netflix should adopt a flat-fee offering wherein their customers
may gain access to unlimited streaming video for a reasonable fee as determined by market
research. To set their price and determine the scope of necessary content acquisition, the
company should conduct public surveys to inquire as to what price consumers would pay to
obtain the following services, followed by a selection of predetermined options.
6.3 Promotion Strategy
A solid promotional strategy will be of pivotal importance to Netflix ability to increase
consumer awareness quickly. Netflix should consider taking out advertisement space offered by
providers of public transportation, as well as in and around the oft-traveled urban roadways used
by motorcyclists. The firm should offer complementary one month trials of their service for new
subscribers responding to their initial marketing push, and bundle the same offering through
partnerships with hardware manufacturers who retail new tablets, PCs, and mobile phones. As is
the case in similar such marketing efforts in other countries, the company will collect billing
information from consumers who sign up for the promotional offer; the terms and conditions of
which will indicate that the subscription will automatically renew at the prevailing rate using the
credit card information provided. This method of subscriber growth must be vetted with local
law, but should the strategy be permitted the exposure to Netflix service offering will increase
consumer trials and minimize attrition.
6.4 Place Strategy
As a web-based service offering, Netflix need not be overly preoccupied with the Place
Strategy of the marketing mix. Distribution of product is performed wholly over the internet,
thus acquisition of the Netflix.tw and/or Netflix.com.tw top-level domain(s) is of primary
concern. Purchase and/or service lease of the physical equipment necessary for the delivery of
services may also fall under place strategy, as geophysical location of servers may impact quality
of service (QOS). The island of Taiwan is small enough, however, that centrally positioning the
equipment in
15
7.0 References
BusinessWeek. (2013, September 3). Life after netflix: For original shows, streaming is just the
first stop. Retrieved from http://www.businessweek.com/articles/2013-09-03/life-afternetflix-for-original-shows-streaming-is-just-the-first-stop
BusinessWeek. (2013, June 25). Taiwans prodigal companies return as china costs rise:
Economy. Retrieved from http://www.businessweek.com/news/2013-06-25/taiwan-sprodigal-companies-come-home-as-china-labor-costs-rise
CIA. (2013, November 6). The world factbook: Taiwan. Retrieved from
https://www.cia.gov/library/publications/the-world-factbook/geos/tw.html
Compete.com. (2013, October). Amazon.com: Monthly traffic analysis. Retrieved from
https://siteanalytics.compete.com/amazon.com/
Forbes. (2012, November 30). Half a billion opportunities for u.s. businesses. Retrieved from
http://www.forbes.com/sites/helenwang/2012/11/30/half-a-billion-opportunities-for-u-sbusinesses/
FundingUniverse. (n.d.). Netflix, inc. history. Retrieved from
http://www.fundinguniverse.com/company-histories/netflix-inc-history/
GlobalData. (2013, September 12). Amazon.com, inc. - financial and strategic analysis review.
Retrieved from
http://globalbb.onesource.com.ruby2.uhv.edu/SharedScripts/Reports/FetchAR.asp?Proces
s=CP&DocID=37a16557-3a1d-4f05-9256-22a89795d1b0&file=file.pdf
GlobalData. (2013, October 4). Netflix, inc. - financial and strategic analysis review. Retrieved
from
http://globalbb.onesource.com.ruby2.uhv.edu/SharedScripts/Reports/FetchAR.asp?Proces
s=CP&DocID=8d1b5943-7b12-4729-9ff3-4b69babb8d53&file=file.pdf
HSBC & PWC. (2010, December). Doing business in taiwan. Retrieved from
http://www.hsbc.com.tw/1/PA_1_3_S5/content/taiwan_51/download_form/commercial/li
b_newsletter.pdf
IDC. (2013, April 10). Pc shipments post the steepest decline ever in a single quarter, according
to idc . Retrieved from http://www.idc.com/getdoc.jsp?containerId=prUS24065413
ITU. (2012). Percentage of individuals using the internet (by country). Retrieved from
16
http://www.itu.int/en/ITUD/Statistics/Documents/statistics/2013/Individuals_Internet_2000-2012.xls
Porter ME (1998). Competitive Advantage: Creating and Sustaining Superior Performance. New
York: Free Press.
SEC. (2013, February 1). Netflix, Inc. - 10-k. Retrieved from
http://files.shareholder.com/downloads/NFLX/2672245506x0xS1065280-138/1065280/filing.pdf
Seeking Alpha. (2013, March 27). Netflix: International expansion and the road ahead.
Retrieved from http://seekingalpha.com/article/1305501-netflix-international-expansionand-the-road-ahead
tradingeconomics.com. (2013). Taiwan gdp annual growth rate. Retrieved from
http://www.tradingeconomics.com/taiwan/gdp-growth-annual
U.S. Commercial Service. (2011). Doing business in taiwan: 2011 country commercial guide for
u.s. companies. Retrieved from
http://export.gov/taiwan/static/TaiwanCommercialGuide2011_Latest_eg_tw_051449.pdf
World Bank. (2013). Ease of doing business in taiwan, china. Retrieved from
http://www.doingbusiness.org/data/exploreeconomies/taiwan-china/