MNG 00723 Assessment 2: Report (40 marks) 2500 words Due: Monday 9 am Week 10 Case Scenario: AUSMED, an Australian pharma company manufacturing drugs, has grown fast in the last 10 years. It currently...

BUSINESS EXPANSION SCOPE FOR AUSMED IN SOUTH AFRICA AND CHINA MARKETS
Executive Summary
In the current report the importance of foreign market assessment is presented through the example of AUSMED, an Australian pharmaceutical company and its aims of entering the two potential foreign markets of China and South Africa. Followed by a brief introduction to the report topic, the in depth assessment of both South African and Chinese Market is provided through the use of PESTEL and SWOT analysis. Based on the information derived from the PESTEL and SWOT analysis of China and South Africa, the justification for choosing one country over the other is described rationally. A range of foreign market entry methods are provided and evaluated in the context of AUSMED and chosen country market. Lastly, a conclusion is added to sum up the understanding derived from the entire report.
Table of Contents
Introduction    4
Analysis of risks and opportunities in South Africa and China    4
Risk and Opportunity in South Africa    4
Risk of Opportunity in China    6
South Africa as the Selected Destination Country for AUSMED Business Expansion    8
Discuss and justify the proposed entry for the chosen country    9
Conclusion    10
References    11
Introduction
In every local market, there remains a demand saturation point. As business organisations reach the demand saturation point, they tend to lose the rapid growth in their revenue, affecting their organisational growth. In order to retain the rate of profit growth, business organisations venture into foreign marketing with the hope that the core competences of the company would help in bringing in new customers and heightened revenue earning. Although simple in approach, venturing into the foreign market for business expansion requires in depth knowledge about the market condition of the country as the economic, social, technological, environmental and legal aspects help in generating the strengths, weaknesses, opportunity and threats in the market. In the given report the real life example of AUSMED is considered as an organisation that has reached its demand saturation point in Australia and aiming at entering the pharmaceutical market of South Africa and China.
Analysis of risks and opportunities in South Africa and China
In order to understand and gather information about the potential a foreign market has PESTEL and SWOT analysis must be used. According to Segura, Morales and Somolinos (2018), PESTEL analysis gives a complete idea about all the aspects of a market and offers better understanding. On the other hand, as mentioned by Adem, Colak and Dagdeviren (2018), SWOT analysis helps in understanding the potential a market has in the backdrop of a business, thereby retaining relevance. In the following section PESTEL and SWOT analysis is used to understand the true nature of the markets of South Africa and China, keeping in mind AUSMED’s intention of entering the two markets.
Risk and Opportunity in South Africa
With the use of PESTEL analysis, it is found that in the market of South African market has a lot of potential.
Firstly, the political reforms in the country have improved the foreign policies in recent times and there has been a development of scope for foreign investors and foreign companies for entering the South African market (BBC, 2018). Based on the recent refinement of political front, it can be expected that entry of AUSMED in South Africa will be easy.
Secondly, South Africa’s economy has improved in recent decades as the country’s politics has managed to address the issues such as racism and corruption and has realised the true potential of the country’s human resource. South Africa has been included as the newest member of BRICS, which is the five selected new economic superpowers and includes the likes of China and India (OECD, 2018). Considering the economic condition and its change, AUSMED can expect a safe and stable market, full of demand.
Thirdly, the socio-cultural condition in South Africa has changed after the political and economic reforms. The prospect of better standard of living, an inclination towards a healthy lifestyle has improved the expectation of general populace. As mentioned by Gelan (2018), people living in a better economic condition value the refinement of social lifestyle. AUSMED being a pharmaceutical company would be benefitted by doing business in South Africa, as there will be ample demand of pharmaceutical products as local people will strive towards living a healthy life.
Unlike the political, economic and social inclination towards AUSMED’s entry into the South African market, the technological quality available is not satisfactory. Many foreign countries are recently entering South Africa, however, the overall availability of modern technology are yet to reach their full potential. As stated by Pietrobelli and Staritz (2018), developing countries need considerable amount of time to reach technological quality. In case of AUSMED, it can be expected that the company has to import its pharmaceutical products from Australia, instead of manufacturing them in South Africa for the time being.
The South African environment is on the hotter side and the atmosphere is moist, not suitable for heavy manual labour. However, the local people are well accustomed to the weather and therefore, provide very high level of manual labour for companies. The lack of snowfall doe not hinders the transportation system as well. Therefore, it can be expected that AUSMED would face no issues from the environmental aspect of the South African Market.
Lastly, in terms of the legislature of the South African market, it is seen that the South African Health Products Regulatory Authority (SAHPRA) and the Medicines Control Council (MCC) regulates all the standardisation processes for pharmaceutical products, their contents, usage, standards as seen from the perspective of public safety and quality of medication (SAHPRA, 2014). Considering the standard procedures used by MCC and SAHPRA, it can be assumed that AUSMED would have no issues getting into the South African market by meeting the standards.
    P- Political
    Reformed Political Policy, which is in favour of easy market entry.
    E- Economic
    Emerging GDP and foreign investment has improved economy.
    S- Socio-Cultural
    Social inclination towards a better lifestyle and healthy living.
    T- Technological
    Technological innovations has not their...