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Custom Cambodia Market Essay

The need for effective and rewarding investment is considered a fundamental platform upon which the report is based. The H4Y Company is contemplating to enter the Cambodian market and it is considering various facets which will favor its investment portfolio.

In order to effectively enter the market, the Company is in need of an efficient PESTEL-C analysis which analyzes the Political, Economic, Socio-cultural, Technological spheres, as well as Competition. It has been noted that the Company is capable of entering the market through an independent-based entry mode since it is well established and past performance indicates growth and development. The company is also fairly placed in terms of competition, since it is able to attract the substantial customer base. As a country, Cambodia has indeed made progress in facilitating trading grounds through such methods as providing government incentives, as well as lessening tax restrictions to foreign-based companies. It is safe to indicate that the country is experiencing a population boom, especially because of the need for replacing lives lost in the course of war.

The Cambodian government has embarked on providing avenues upon which investments could be improved. The fact that the infant mortality rate is low while the birth rate is posting significant figures is a facet worth considering, since these populations determine the demand for H4Y vitamins-related products. Further, the possibility of the future increase in the potential market is a fact which is worth noting, taking into account that the Cambodian government is open for such trade agreements which are to catapult FDI into the country. A pint worth mentioning to cement the aforesaid basis is the recent Cambodian engagement in WTO trade agreement, making it the first South-East Asian country to form the cooperation.

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Statistic Analysis of Cambodia Market

Birth Rate: 751 births out of 1,000 births

Infant Mortality Rate: 58 births out of 1,000 births

Out of 1,000 births the surviving population is (751-42.9) = 708 children

Total Population as at 2008 is 14,139,000 =? = (14,139,000*708)/ 1,000= 1,010,412

As indicated above with the calculations, there are about 1 million children throughout the country which constitutes a significant figure for the vitamin-related products.

The Kingdom of Cambodia is located in the Southeast Asia, and it is governed through a monarchy. A larger percent of Cambodian population live under the poverty line. Statistically, 67% of the pollution relies in agriculture with further advancements made in tourism, textile and construction. Phnom Penh is the country’s capital city where most of administration functionalities are conducted. Buddhism is the most popular religion among its population (Travelinfo.Com, 2004).

In 2005, the country made research advancements in such mining as oil, and natural gas deposits were discovered in its northern part. With the aforementioned advancements, it is safe to postulate that the country is open to immense business opportunities. The country is also ranked well in terms of “ease of conducting business”. Notwithstanding, potential investors seeking to conduct businesses in the country are required to deposit an initial capital of approximately 4 million KHR. It should be noted that the Commercial Register is the government body mandated with the responsibility of determining a company’s eligibility before commencing with operations. Total costs for registering a company’s amounts to $ 495, the amount being inclusive of VAT and patent rights for the company (Doing Business, 2012).

Another important fact to note is that citizens are willing to learn English as a business language and the government is in the process of formulating policies, as well as strategies, which are aimed at improvising the manner in which business operations are to be conducted. Such formulations include providing necessary materials needed for learning the language. In Cambodia, green and red colors are considered lucky and thus, are acceptable within the culture, while color white is considered unlucky and tabooed in that matter.

A culture of people is considered the most important aspect which can be used to determine the success of conducting business. In terms of power and authority, the culture of Cambodia distinguishes different forms of referent powers existing within an organizational setting. A clear distinction is made between young and old, as well as superiors and subordinates. This distinction facilitates the smooth operation of a company, since directions and policies are adhered to without questions (Hofstede, 2007).

Authoritative leadership style is the most appropriate form of conducting the organization’s operations, since executives are allowed easier approach needed for making independent decisions (Mai, 2009).  Within its culture, citizens are fond of keeping a reputable personality. This means that superiors desist from those activities which destroy ones traits, as well as characters. Degree of cohesion and loyalty is considered a significant piece in bringing people together. Therefore, care should be taken by H4Y when dealing with matters; business as activities is conducted in a manner that discourages elements of shame and embarrassment in public (Export.gov, 2012).

Taking into account the fact that the country experienced the political unrest, it is safe for H4Y to engage in assigning roles which promote the gender equality and cohesion. The political unrest is attributed to the reduction in the number of males which forced women to assume those roles which were previously held by men.

To sum up, culturally, it is fair to assume that the aspect of collectivism determines leadership styles in Cambodia, group of workforce can work effectively whenever elements of authority are exercised and also foreign organizations wishing to set up institutions are advised to maintain element of gender sensitivity with respect to delegating duties and authority (Serpa, 2003).

It is assumedly clear that the Company is well-established in selling vitamin products. This is witnessed by the fact that it has been able to access and understand health needs of both New Zealand and Australian markets. Also, it is safe to indicate that the Company is well placed financially and, thus, it is capable to conduct the activity without fear of financial stability.

Further, it is safe to postulate that the Company possesses relevant expertise which can be used to establish and develop H4Y Company in Cambodia.   The fact that the Company has over years maintained a strong, clean green image is plus, since green and red colors are considered lucky within the culture of its people.

Politics of a country is considered crucial in determining the level of success for any business hoping to join a new market. Cambodia’s politics is taking a strong grip, especially because of the experience it had earlier on in the course of war. The government has been able to formulate strategies which are aimed at assisting its citizens in understanding the need for peace and tranquility. In that case, it is considered safe to carry out investments.

The government has also entered into several organizations, such as ASEAN and, recently, WTO which promotes cohesion, as well as corporation of its member states in terms of trade (ASEAN Secretariat, 1999). Such trade agreements provide clear platform upon which business opportunities are established and developed. By entering the Cambodian market, H4Y is likely to expand regionally, so that its vitamins-related products are availed to a wider customer base. Also, it should be noted that the government does provide substantial incentives, as well as lessening restrictions which were initially put on imports by foreign companies.

Taxes for foreign based companies have been subsidized dramatically by the government to encourage foreign investors. This is also because of the shortage of healthcare facilities in Cambodia. The country does not suffer from terrorism threats which provide a favorable environment for conducting business growth and development.

Cambodia is a country which is operating under an emerging economy which means that substantial levels of efforts are encouraged to access the financial investments.In terms of cost of capital, the country is considered efficient, since it takes fewer investments to provide substantial profits. The cost of living is also promising, meaning that individual households are capable of purchasing health products.

It is worth noting that the government does regulate interest rates offered by financial institutions: this is advantageous to H4Y, in case it aspires for expansion activities. Since in this way, financial support is made easier and cheaper to obtain. It is also worth noting that the annual financial aid which the country receives from the U.S is injected to developing the economy, meaning that it is capable of supporting several development-based activities within its boundaries. Inflation rates within the country are subsequently low, as compared to other Asian countries. This means that Cambodian currency has value and it will be safe to put investments into the country.

The labor market in Cambodia is effective and efficient. In the course of war, most of the citizens travelled abroad where they were educated and returned with skills and abilities when it was over. These populations possess the skills required to operate a firm. The labor market is also organized within the trade unions whereby standard rates for wages are negotiated. In that case, H4Y is placed at an upper hand over the matter, since it is protected from unnecessary wages exploitations (Hing, 1999).

Cambodian population is made up of 13.4 million people earning a per capita income of about $ 760 ADB (Asian Development Bank, 2001).  The population is made up of more women than men while children cover, at least, 45 % of the population. Children of ages one to four covers 22 % of the children population. It is assumedly clear that the country is in its reproduction stages, since it did experience civil war which cut-down on the number of men dramatically. Since H4Y is concerned with production and selling of vitamins-related products to children, it is considered viable to operate under this market, taking into account that the population is sensitive to the health matters (Radhakrishna, 2011).

Further, it is worth noting that investing in the country will bring about loyal customers, since the population is growing, while demand for the product is created, hence a large loyal customer base.

In terms of technological advancements, the government of Cambodia has partnered with developed nations, which have advanced in the sector, in order to assist the country in bringing about the competitive advantage in its sector. In this manner, there are open chances for the government to partner with H4Y to establish the effective technological advancements in the health sector. The opportunity is considered viable, since the Company possesses relevant expertise in the sector and can provide relevant and reliable training to the local workforce which they can further emulate for the public health purposes.

Major investments have been made in terms of road network infrastructure, so that the capital city is well-interconnected with neighboring cities within the region. Cambodia is connected to its neighbors, mostly, by roads. Internet connection service is improving, since the government has taken the initiative of providing incentives and tax holidays to companies interested in provision of the service.

Competition level within the health sector is still growing. This is evident by the fact that the government provides health incentives to the foreign investors wishing to put resources into the sector. The government is also ready to partner with established companies to provide the minimum health care to its citizens, especially because of the need to maintain children population. However, there are a few companies providing similar services, but unlike H4Y, they specialize in trading, as compared to H4Y, which manufactures and distributes the vitamin-related products to the established markets.

Such foreign company as Natural Remedies Pvt. Ltd is concerned with low budget production of similar products which does not satisfy the demand (Feed Additives 1.Com, 2005). It is assumedly clear that the government imports most of its vitamin-related products to satisfy the demand. In this case, it is safe for H4Y to seek ways through which it could provide these supplies. The effective way to attain this goal is to establish a manufacturing plant to serve the public market niche.

The aforementioned company covers an insignificant percentage of the population which leaves a significant niche which is subsequently economical to tap.

There are two ways which H4Y can use to enter the Cambodian market. The company can either choose to partner with the Cambodian government or go through the independent investments. In case that the company chooses to partner with the government to provide the vitamin health products, it is worth noting that ownership will be shared in a ratio agreed upon. The main advantage attributed to this mode of “entering the market” is the fact that the products will access the ready demand, and there would be a possibility that the Company could start making profits, as soon as it enters the aforementioned market. Also, it is assumedly clear that the Company can commence with its operations quickly, since required procedures will be taken care of by the government and by that be allocated a favorable place upon which to conduct its activities.

The Company can also be protected from the external competition, taking into account that in both Australia and New Zealand markets it faces the stiff competition from the American-based company. Long-term contracts that will be made between the entity and the government will cut-down on costs attributed to the inherent risks involved.

In order to support the aforementioned probability of partnering with the government, there lies the fact that the country experiences healthcare plight and opportunities to provide health-related products to the ever-growing population is of the core significance.

In case the Company embarks on conducting its activities independently, it would mean that it would be forced to enter the market competitively. This means that it will undergo a thorough registration scrutiny with the Committee of Company Registration within the Ministry of Commerce and acquire a certificate for conducting operations. Advantages attributed to this mode of entry are full of ownership of the Company, full profits, as well as the whole decision-making functions. However, the Company is prone to the external competition, inherent costs, due to risks involved, as well as possibility of closure, due to the lack of demand for the products.

It is safe to postulate that the market size for Cambodian based products is on the increase. This increase is based on two facts which are population increase, as well as the willingness of the government to enter into future trade agreements. The population of Cambodia is depicted as increasing, since the government is on a strategy to replace the workforce which was lost in the course of the civil war. In terms of the development, the country is putting up with each and every opportunity that avails itself for the purpose of promoting trading activities. In recent years, the government was perceived to foster the trade opportunities that were going to result from such organizations, such as World Trade Organization (WTO). The country becomes the first South-East Asian country to join the organization which depicts its efforts for the development. In this case, it is safe to assume that the marketing strategies for H4Y are going to be affected to fit in with the advanced changes meaning that advertising campaigns will be formulated to reach a wider market, such as the ASEAN market, as well as that of the local consumers. Strategies, such as educational campaigns, are the most appropriate for the local customer, as well as the engagement in corporate social responsibility in order to gain the popularity it needs from people.

The possibility of the market widening means that the demand for the product is going to increase, as well. In this case, H4Y is expected to tap a portion of the increased marketing niche by investing on manufacturing processes, as well as raw material management. In terms of material management, the Company can resort to sourcing most of its raw materials from the local population.

The Strategy which involves including the local population into providing materials will not only cut costs, but also increase the loyalty from customers who will provide the ready market for locally-produced products. In terms of manufacturing, the company is expected to increase its production base to other manufacturing points within the area to supply the products to the local communities, as well as neighboring countries within the South-East Asian region. The skilled labor market, as well as the affordable cost of capital, are items which will facilitate the success of the process altogether.

According to the statistics provided by the National Institute of Statistics (2005), the immediate approximation of infant mortality rate is attained by determining the ratio of the number of deaths which occurred under the age of one to the number of fortunate births in a period not exceeding 12 months. Statistically, 58 infant death rates are posted per 1,000 of fortunate births.

The birth rate for the period between 2004 and 2008 census was 734 and 769 live births per 1,000 of births posted. Taking the average: (734+769)/ 2, the figure amounts to 751 live births for every 1,000 births (NIS, 2005).

The Cambodian health market is considered to be an opportunity to exploit. This is because of the ease with which the government conducts registration of companies. Foreign investments are encouraged by the government, since the country is an emerging economy and growth and development are its main goal. The country underwent a substantial period of civil war which destroyed the economic stability and with this; the country is in need of effective health services to provide to its ever-growing population mainly made up of children.

In terms of infrastructure, Cambodia is placed fairly in the ASEAN region and this can be used as an opportunity for expansion and growth. The fact that the government is open to trade agreements makes it easier to import goods and services. This can be used by H4Y to its benefits, since it will increase profits as taxation costs are relatively low.

Therefore, it is safe to postulate that H4Y can enter the Cambodian market to provide vitamin-related products, since the demand for the product is high. The best methodology is to enter the market independently, mainly because the Company is well established and can tackle competitions efficiently. Further, there is a room for the future growth and expansion to other neighboring regions since the country assumes the trade agreements.

To sum up, Cambodian government has embarked on strategies which promote Foreign Direct Investments (FDI) through lowering of costs involved with promoting of trading activities, providing favorable investment environments, as well as improving exports-based development strategies.

Custom Cambodia Market Essay

Code: Sample20

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