Market analysis plan with recommendations for Ptmind
The main purpose of the research was to find an answer to the main research question:
“What factors must Ptmind take into account if they want to enter the Dutch market?”
I has contact with Ptmind, a Japanese company in Japan before coming to the Nethelands. Ptmind is a leading Heatmap and Web analytics platform service provider which was
founded in 2010. Ptmind told Mako that they were interested to expand their platform services to the Dutch market. The three of us were very interested in this idea and decided to develop a market analysis report for Ptmind on how they can enter the Dutch market successfully.
Market analysis plan with recommendations for Ptmind
Individual Assignment Block 1
Market Analysis Report
Mako Shimomura – 0889231
Qingyuan Guo – 0842324
Yinglin Rong – 0844056
IBMS401 - Group 3A
Project Coach: Mr. Rog
03 November 2014
Table of Contents
Executive Summary ............................................................................................... 3
Chapter 1: Introduction ......................................................................................... 4
1.2 Company Background ........................................................................................................... 4
1.3 Contact Persons from Ptmind ............................................................................................... 5
1.4 Project Objectives .................................................................................................................. 6
1.5 Main Research Questions and Objectives ............................................................................. 6
1.6 Fishbone Diagram ..................................................................................................................7
Chapter 2: Literature Review ................................................................................. 8
2.1 Industry Analysis ................................................................................................................... 8
2.1.1 PEST Analysis .................................................................................................................. 8
2.2 Target Market Analysis ......................................................................................................... 9
2.2.1 Business Market Segmentation ...................................................................................... 9
2.2.2 Market Targeting Strategy .............................................................................................. 9
2.3 Competitor Analysis .............................................................................................................10
2.3.1 Porter’s Five Forces Model ............................................................................................10
2.4 Market Entry Analysis ..........................................................................................................10
2.4.1 Porter’s Generic Strategies .............................................................................................10
2.4.2 Modes of Market Entry .................................................................................................. 11
2.5 Cultural Analysis .................................................................................................................. 12
2.5.1 Hofstede's Cultural Dimensions .................................................................................... 12
Chapter 3: Methodology ........................................................................................ 14
3.1 Research Methods ................................................................................................................ 14
Chapter 4: Research Findings ............................................................................... 15
4.1 Industry Analysis .................................................................................................................. 15
4.1.1 PEST Analysis - Macro-Environmental Analysis ........................................................... 15
4.2 Target Market Analysis ........................................................................................................ 18
4.2.1 Business Market Segmentation ..................................................................................... 18
4.2.2 Target Marketing ........................................................................................................... 19
4.2.3 Potential Partners .......................................................................................................... 19
4.3 Competitor Analysis ............................................................................................................ 20
4.3.1 Porter's Five Forces Model............................................................................................ 20
4.3.2 Potential Competitors in the Dutch Market ................................................................. 23
4.4 Market Entry Analysis ......................................................................................................... 24
4.4.1 Generic Strategy ............................................................................................................ 24
4.4.2 Market Entry Modes ..................................................................................................... 26
4.4.3 Challenges in the Business-to-Business Market .......................................................... 27
4.5 Cultural Analysis ................................................................................................................. 28
4.5.1 The Hofstede’s Cultural Dimensions ............................................................................ 28
4.5.2 Laws/Regulations and Business Etiquettes ................................................................. 30
Chapter 5: Conclusions and Recommendations .................................................... 32
Bibliography ......................................................................................................... 33
Appendix 1: E-mail Attachments Related to the Projects ....................................... 37
Appendix 2: Activity Log ....................................................................................... 41
Appendix 3: Self-Reflection and Lessons Learned................................................ 46
The purpose of this report was to develop a market analysis plan with recommendations for Ptmind on how a Japanese company can expand their services into the Dutch market. Ptmind is an innovative web analytics service company that was founded in June 2010 and they have offices in China and Japan. Ptmind is interested to expand their platform services to the Dutch market and thus the main purpose of the research was to find an answer to the main research question:
“What factors must Ptmind take into account if they want to enter the Dutch market?”
In chapter 2 of this report, all the theories that was used to construct the theoretical framework is analyzed and explained. The following theories are looked into: PEST analysis gives an insight for the industry analysis, the business segmentation and target market strategies are for the target market analysis, Porter’s Five Forces model analyze degree of rivalry, the entry modes and strategy gives an overview for the market entry analysis and Hofstede’s cultural dimensions gives insight on the cultural analysis.
In chapter 3, the research methods that were used are explained in more detail. For this research, mainly secondary research was conducted to construct the findings and answer the research questions.
The findings of the research are described in chapter 4. In the industry analysis, it is indicated that the Netherlands is becoming a more important place for IT services companies because the IT services industry in the Netherlands is growing fast and it is expected to reach 6.2 billion Euros by 2018 with an annual growth rate of 1.5%. In the target market analysis, it is mentioned that Ptmind can focus on demographic segmentation with concentrated targeting strategy to target Japanese firms in the Netherlands. Potential partners they can work with are Canon Europa N.V., Asics Europe B.V., Yamaha Motor Nederland B.V. In the competitors analysis it is indicated that there is strong degree of rivalry among existing competitors in the IT services industry. To create a competitive advantage Ptmind can use differentiated focus strategy as a strategic choice. In the market entry analysis it is indicated that co-marketing and green field investments are two entry modes that Ptmind can consider if they want to enter the Dutch market in the future. In the cultural analysis it specified that the major differences between the Netherlands and Japan is that the Netherlands focus more on individualism while Japan focus more on group cohesion and the Netherlands has a feminine culture while Japan has a strong masculine culture. Gift giving is very popular during business transactions in Japan and it is not common in the Netherlands. Ptmind must abide by local Dutch laws and regulations if they enter the Dutch market.
Followed by the findings, the research questions are answered in chapter 5. Based on the findings, conclusions and recommendations are also given in this chapter. Further research is needed if Ptmind wants to implement a successful entry strategy in the Dutch market.
Chapter 1: Introduction
Mako is an exchange student from Japan and she has contact with Ptmind, a Japanese company in Japan. Ptmind is a leading Heatmap and Web analytics platform service provider which was founded in 2010. Ptmind told Mako that they were interested to expand their platform services to the Dutch market. The three of us were very interested in this idea and decided to develop a market analysis report for Ptmind on how they can enter the Dutch market successfully.
1.2 Company Background
Ptmind is an innovative web analytics service provider. The company was founded in June 2010 and they have offices in China and Japan. Ptmind expanded and started offering the same service in the US under a different brand name, Miapex in November 2013. But shortly afterwards, Ptmind integrated their English brand name with their original brand name, and now it is called Ptengine. Ptengine is a leading Heatmap and Web Analytics platform, over 8000 companies use Ptengine as a web development tool to improve their business. Moreover, Ptengine won a G-Mark (Good Design) Award in 2013 (Ptmind, 2014).
The team of Ptmind is made up of talents from China, Japan, United States and United Kingdom. The core members include former architect from Tencent which is one of the world's largest Internet firms, former Chief Business Consultant from Adobe Omniture, former Database Engineer from JD.com and also many experts from Huawei, Teradata, Sina, China Mobile, OKWave and other famous IT companies (Ptmind, 2014).
Ptmind provide their business partners:
An easy-to-use Ptengine’s heatmap and web analytics technology;
A high-quality international service by the professional consultant team;
A critical insight on their potential customers’ behavior when they are navigating;
A better insight into visitor retention and engagement;
An eye-opening and holistic view of the users;
Detailed, specific and straightforward data analysis;
Ptmind have international standard of facility and resources:
Top level of network resources with 8-line BGP, to guarantee the network speed;
International standard of data structure, to guarantee the accuracy and stability;
Internationally compatible sources, with wide coverage of SNS, device and geographic information.
Ptmind focus on the dynamic international innovative environment:
Develop worldwide view of products;
Accelerate the upgrade process of product;
Optimize the functional design;
Aim to provide excellent and professional services.
1.3 Contact Persons from Ptmind
Allen Zhao - Senior Marketing Director (China)
Tony Li – Senior. Marketing Director (China)
These are the following main contact persons from Ptmind. When we contact the Marketing Directors of Ptmind from China, we also need to send a carbon copy of the email to Ryotaro Ohara, who is the person in charge of Marketing in Japan. His email address is: email@example.com
1.4 Project Objectives
Our main objective was to develop a market analysis report with recommendations for Ptmind on how a Japanese company can expand their services into the Dutch market, by doing research on the Dutch market, entry strategies, competition and analyzing the cultural differences between the Netherlands and Japan on the way they conduct their businesses and services.
1.5 Main Research Questions and Objectives
What factors must Ptmind take into account if they want to enter the Dutch market?
1. Which macro-environmental factors can impact Ptmind’s decision to enter the Dutch market?
The research objective is to analyze the macro-environmental factors that can have an impact on Ptmind’s decision to enter the Dutch market and what challenges they will encounter in the process.
2. Which segmentation strategies can be used to approach their target market and who are potential business partners that Ptmind can cooperate with?
The research objective is to define the most suitable segmentation strategy for Ptmind to approach their target market and also define how they can establish business relationship with potential partners.
3. Who are the main competitors for Ptmind in the Dutch market?
The research objective is to define who the main competitors are which Ptmind will encounter when they enter the Dutch market and how rivalry can impact their business.
4. Which entry mode and strategy can be used by Ptmind to enter the Dutch market?
The research objective is to define the most suitable market entry strategy for Ptmind to enter the Dutch market and what benefits and risks are involved during the process.
5. What are the cultural differences between the Japanese and Dutch market?
The research objective is to define the cultural differences between the Japanese and the Dutch market, e.g. the different business etiquettes and the laws and regulations that must be taken into account when entering this market.
Chapter 2: Literature Review
In this chapter all the theories that are used to construct the theoretical framework for the research are described. It is important to understand the macro-environmental factors and clarify how it can impact the organization. Also, understanding the customer segment is important before an organization choose enter a new market. Market entry is an essential topic in the international business literature. In fact, the establishment of an entry mode is an important part of the process of internationalization. While entry strategies are interesting topic for businesses, it is also essential to look at the risks, challenges and cultural differences that can be encountered in the new foreign market.
2.1 Industry Analysis
In order to be aware of how changes in social behavior, new laws and technological innovation in the Netherlands can create opportunities or threats, we would like to explore the macro- environment forces and identify which forces have implications for the IT services industry that Ptmind wants to enter.
2.1.1 PEST Analysis
Political factors: governments’ interventions play an important role in determining the rules and regulations in the IT industry. Thus it is important to understand the political factors, which are the policies, regulations that are imposed by the government, and how it can have an impact foreign investment in the IT industry (Professional Academy, 2014).
Economic factors: all the economic indicators of how the IT industry is doing in the Netherlands are relevant to see if it will be a good choice to invest in the country or not. Thus it is essential to understand which economic factors can have an impact on how the IT industry is operating and how it can influence business performances of companies in that sector. These can play a role on the final decision to make a foreign investment or not (Professional Academy, 2014).
Social factors: this includes the cultural aspects of the country which can influence IT industry. E.g. the population, career attributes, demographic aspects etc. of the country and how all these relate to the IT sector. Understanding these factors can help the company to better understand the existing market of the IT industry (Professional Academy, 2014).
Technological factors: changes in technology are growing very fast in the IT industry and this can influence marketing opportunities; create new product/service development opportunities (Professional Academy, 2014). Thus understanding all the technological changes and innovation in the country and the industry can play a role for the organization to have a better overview of their position on the market (Chaffey & Ellis-Chadwick, 2012).
2.2 Target Market Analysis
2.2.1 Business Market Segmentation
Market segmentation is a marketing strategy that involves the process of analyzing an identifiable group of potential consumers with similar characteristics within a market, which are relevant to explain and predict their response to an organization’s marketing action. In general, there are different factors or variables that should be taken into account when using the segmentation strategy for the business-to-consumer market and business-to-business market (Business Market Segmentation Bases, 2012).
There are five major segmentation variables for business markets: demographic variables, purchase approaches, behavioral variables, personal characteristics and situational factors. All of which can be used to help an organization to identify the target groups and provide valuable data for positioning to achieve a marketing plan objective (Business Market Segmentation Bases, 2012).
2.2.2 Market Targeting Strategy
It is essential to get the target market right at the beginning of the business process. Thus, target marketing allows marketers to customize their message to the targeted group of consumers during the market positioning process. It can be seen that market targeting strategies are constructed from consumer behavior analysis and preferences. There are three basic strategies for marketers to satisfy the target market: undifferentiated marketing or mass marketing differentiated marketing, concentrated marketing (Marketing, 2012).
Generally speaking, concentrated marketing belongs to the differentiated marketing strategy when doing business in the global marketplace, because concentrated marketing involves targeting a very select group of customers. Moreover, companies can design and implement market targeting strategy to approach specific products or product lines depending on the specific demand and attributes of the target markets (Selecting Target Markets and Target-Market Strategies, 2014).
2.3 Competitor Analysis
2.3.1 Porter’s Five Forces Model
The Porter’s Five Forces is a framework to analyze the level of competition within an industry and business strategy development. The five competitive forces will help a company to understand the structure of the business industry and its business situation when competing in the market. It is useful for enterprises to figure out the capability of their current competitive position and better understand their competitors (Peng, 2009).
Typically this five forces model is shown as a series of five boxes in a cross formation which are all connected to each other. The five forces that shapes the industry competition are:
Threats of New Entrants
Bargaining Power of Suppliers
Bargaining Power of Buyers
Threats of Substitutes
Rivalry Among Competitors
By having a clear understanding of where they stand in the specific competitive industry, companies can take an advantage of their strengths, improve their situations or weaknesses and avoid making wrong decisions when they are moving into next step in the market (Assessing the Balance of Power in a Business Situation, 2014).
2.4 Market Entry Analysis
2.4.1 Porter’s Generic Strategies
The Porter’s Generic Strategies is a model designed by Micheal Porter in 1979. In this framework, Porter has introduced 3 generic strategies, which can be used by companies to strengthen their position against their competitors and gain a competitive advantage over them (Peng, 2009). The three generic strategies are:
Cost leadership strategy
A cost leadership strategy is when a firm compete against their competitors through low cost and price. The firms that use this strategy strive to be the leader in the market as a low cost producer to sell the products against lower prices to gain market share. They utilize all sources that they have to have a cost advantage. One example of a company that uses the cost leadership strategy is Wal-Mart (Griffin, 2013).
Differentiation strategy focus on providing a unique service or product that is valued by customers. It involves how companies can distinguish themselves from their competitors and make them more attractive. In order to be successful with this strategy, it is important for companies to first do good research on the market and come up innovative solutions, which set them apart from competitors to create a competitive advantage. By setting themselves apart, they can ask premium prices for their services or products. Apple Inc. is an example of a company that uses this strategy (Griffin, 2013).
Focus strategy concentrates on a specific narrow segment. By focusing on a narrow segment, companies will be able to tailor their strategy to specific needs in that particular group and serve them better than competitors that focus on a much broader range of the market. Focus strategy works best for small companies that have limited resources available to compete against competitors. Companies can choose between cost focus or differentiation focus strategy. Cost focus is when companies focus on cost leadership in that narrow segment and differentiation focus is when they focus on differentiating themselves from competition in the narrow segment (Griffin, 2013).
2.4.2 Modes of Market Entry
There are many types of market entry modes that companies can consider when they want to enter a foreign market. Entry into a market in a specific country might be different and not work in another. Therefore, it is important to analyze the benefits and risks that are involved for each modes of entry (Tradestart, 2014). The entry modes can be categorized into equity and non- equity entry modes. Equity entry modes can be divided into export and contractual agreements; non-equity modes can be divided into joint ventures and wholly owned subsidiaries (Peng, 2009).
With this entry mode, companies manufacture their products outside the host country and then it will be transferred back to the host country directly or indirectly. The company then needs to decide which activities will be outsourced and which part will be taken care of by themselves. There are two types of export, direct and indirect export (Peng, 2009).
Contractual entry modes include licensing, franchising, R&D contracts, turnkey projects and co- marketing. Licensing and franchising is an agreement between two parties to sell rights of intellectual properties for a royalty fee. R&D contracts involves an agreement to outsource R&D between companies. In turnkey projects, companies pay contractors to do projects and when the project is completed it will be handed over to the company. Co-marketing is an agreement between companies to jointly market their services or products (Peng, 2009).
Joint ventures is a partnership between two companies to create a new entity that is managed by both of them and they share all profits and losses together. There are three forms of joint ventures, minority joint ventures which means owning less than 50% of the equity, 50/50 joint ventures which means owning equal equity, and majority joint ventures which means owning more than 50% of the equity in the new entity (Peng, 2009).
Wholly Owned Subsidiaries
A wholly owned subsidiary is an entity established in a foreign country that is owned entirely by the parent company. There are two types of wholly owned subsidiaries, green-field operations and mergers and acquisitions. Green-field operation refer to creating a subsidiary from scratch. Green-field operations gives the parent company complete control over the management and equity. There is also control over the technological know-hows and intellectual properties. This allows companies to have more flexibility and freedom compared to joint ventures or acquisitions. Merger or acquisition is when a domestic company acquire another or merge with another company in the foreign country to enter into the specific market, this mode of entry has a fast entry speed compared to green field operations (Peng, 2009).
2.5 Cultural Analysis
2.5.1 Hofstede's Cultural Dimensions
Hofstede's cultural dimensions theory is a framework for international communication, which is developed by Geert Hofstede, who is a Dutch social psychologist. It allows the organization to assess whether its culture supports the goals of it, whether it would like to change the culture or what kind of people it wants to recruit into its team, by describing the effects of a society’s culture of the values of the members, and how these values relate to their behavior. The theory has been widely used in cross-cultural communication and international management of the organizations (Hofstede, Hofstede, & Minkov, 2010). Moreover, the theory allows to predict what will be likely to happen in the organizations in the future after well understood. (Mind Tools, 2014)
In this framework, there are six dimensions of national culture: Power Distance, Individualism versus Collectivism, Masculinity versus Femininity, Uncertainty Avoidance, Long Term Orientation versus Short Term Normative Orientation, and Indulgence versus Restraint (Hofstede, 1980).
Power Distance Index (PDI)
Power distance refers to the extent that those with power or without power expect and accepts the degree of inequality. A high score indicates that the distribution of power is unequal and people accept that. A low score indicate that power is shared and equally distributed (Mind Tools, 2014).
Individualism versus Collectivism (IDV)
This dimension addressed the degree of interdependence a society maintains among its members. Individualism indicates that there are loose ties between individuals in the society and they focus more on “I” instead of “We”. Collectivism on the other hand focus more on group cohesion (Mind Tools, 2014).
Masculinity versus Femininity (MAS)
This dimension looks at how society distribute the level of competitiveness, achievements and success. A low score indicates that the society is more feminine so it is not driven by competition and they are more focused on quality of life instead of success (Mind Tools, 2014).
Uncertainty Avoidance Index (UAI)
This dimension looks at the how the society deals with uncertainty and unknown circumstances. A high score indicates that the society tend to avoid uncertain circumstances and a low score indicates that the society is comfortable with uncertainty and value the differences (Mind Tools, 2014).
Long Term versus Short Term Orientation (LTO)
This dimension describes how the society relate to the pragmatic virtues of values and traditions. A high score indicates that values and traditions are very important and people should avoid losing face. If the score is low, it means that traditions and values are not that important and people are open to exchange ideas and adapts easily to changes (Mind Tools, 2014).
Indulgence versus Restraint (IND)
This dimension looks at “the extent in which people try to control their desires and impulses (The Hofstede Centre, 2014)”. Indulgence indicate that there is weak control and restraint indicates that there is strong control.
Chapter 3: Methodology
3.1 Research Methods
For this report, we had to conduct research in order to answer our main and sub research questions. The research method and sources that were used to answer the research questions will be specified.
There are many types of research methods that can be used to gather data to answer research questions. There are two types of research and it can be described as primary or secondary research. Primary research is when researchers conduct a research themselves to collect new raw data through surveys, interviews, observations etc., so primary data is collected by the researcher to answer research questions or problems (NSW HSC Online, 2014). Secondary research is when researchers collect existing data that was collected by others through desk research. By using secondary data collected by others from reports, books, and articles on the internet or library to find arguments to support and answer their research questions or problems (NSW HSC Online, 2014).
For our research, we have mainly conducted secondary research to construct our findings and answer the research questions. We had tried to conduct primary research during our research period, we wanted to do an interview with an organization to collect primary data to support our findings. However, it was difficult to find a company that was willing to accept interviews from us, we had emailed a few companies but we didn’t get any reply and we called the Japanese Chamber of Commerce but unfortunately they were not able to provide us with any data for our research. Thus, due to the short amount of time we had left to conduct the research, we were not able to collect any primary data for our report.
To answer our main research question, we first had to answer our sub research questions. For every topic on the fishbone which is linked to the sub questions, we collected secondary data. We used online sources from the internet and the book “Global Strategic Management” by (Peng, 2009) to construct our theoretical frameworks. To answer the research questions, we did a market entry analysis, an industry analysis, target market analysis, competitor analysis and cultural analysis. We collected qualitative and quantitative data from research reports done by (Tanganelli & Schaan, 2014), (Marketline, 2014), and survey results from Econsultancy and Lynchpin to construct our findings. Quantitative data on competitors in the Dutch market has been collected from E-merce, who specialize on conducting yearly research on the best performing e-businesses in the Netherlands (Emerce, 2014).We also used secondary data from articles, and e-books we found online from reliable sources to support our arguments and findings.
Chapter 4: Research Findings
4.1 Industry Analysis
4.1.1 PEST Analysis - Macro-Environmental Analysis
Like was mentioned in the literature review, we had to identify which macro-environmental factors in the industry can have an impact on Ptmind’s business and their operations. We did the PEST Analysis to analysis to get a better overview of the Dutch market.
The Netherlands is a parliamentary democracy and it is governed by a coalition of different political parties. The Netherlands has an international oriented economy with open trade investment policies for international trade. The government also provides different kinds of subsidies to attract foreign companies to enter the Dutch market. The government offer low taxes and favorable laws to welcome international companies (Marketline, 2014). According to Marketline, from a research done by the World Economic Forum on 144 different countries, the Netherlands ranked fourth with regards to a well-developed IT infrastructure and data networks (Marketline, 2014). The government supports and works closely with companies in the private sector to create a better IT infrastructure (Netherlands Enterprise Agency, 2014). The Netherlands is becoming a more important place for IT services companies such as Ptmind because it is emerging as a technology hub for data center services (Netherlands Foreign Investment Agency, 2012).
Source: (Netherlands Enterprise Agency, 2013)
The Netherlands has the 6th largest economy in the European Union and is the 16th largest economy in the world (NL EVD International, 2014). The GDP in 2010 was more than 588 billion Euros (Marketline, 2014). The Netherlands has a very open economy compared with other countries in the European Union. Due to the implementation of systematic reforms in the labor market and IT security systems, better conditions has been created for a better economic growth in the IT services sector. This created chances for more investment opportunities on innovation progresses and developments, which helps the Netherlands to remain a well-developed IT services country (NL EVD International, 2014). As can be seen in table 1 below, the IT services industry has reached $7.7 billion which is 5.8 billion Euros in 2013; a growth of 2.4% (Marketline, 2014).
Source: (Marketline, 2014)
Marketline projected that by 2018 the IT services industry will reach a value of $8.3 billion which is 6.2 billion Euros with an average annual growth rate of 1.5% from 2013 (Marketline, 2014). The projected growth can be seen in table 4 below.
Source: (Marketline, 2014)
The Netherlands has done well in human development through high levels of education, healthcare systems, and distribution of income. According to Marketline, the Netherlands ranked 4th among 187 countries for the human development index with a score of 0.921 in 2013 and in 2012, the Netherlands scored 80.90 for the life expectancy rate, which is very high and they had a high literacy rate of 99%. The Netherlands is a multicultural society with highly educated people and equality. The Dutch market is very international so people here are very used and open to foreigners. Therefore, it has become one of the most ideal business places in the European Union for foreign companies (Marketline, 2014).
“The Netherlands is one of the most “wired” countries in the world (NL EVD International, 2013)”. From all the households in the Netherlands almost every person has a personal computer. In 2012, 94% of those households have access to the internet, and 83% has broadband connections (NL EVD International, 2013).
The Netherlands’ technology has developed through the years and it is now one of the most innovative locations in the world. Therefore, many technological companies do business and have their headquarters situated in the Netherlands (Netherlands Enterprise Agency, 2014). The Dutch IT infrastructure is very developed and thus it has become an ideal place for IT service companies. Around 70% of innovations here are related to IT services and developments. The Amsterdam Internet Exchange, which is one of the most relevant and largest internet hubs in the world, is situated in The Netherlands. In 2009, the total amount of IT expenditure was around 29.1 billion Euros and there was around 25 thousands of IT companies and 260 thousands of IT professionals at work (NL EVD International, 2013). It can be seen that IT services is evolving very fast in the technological sector.
4.2 Target Market Analysis
4.2.1 Business Market Segmentation
Ptmind is an innovative company which provides a leading Heatmap and Web Analytics platform to its customers, till now the company has more than 1000 business clients and empowering over 8,000 web development around the world.
For Ptmind, their target group is not an individual customer, their major segmentation is the business market. Ptmind mainly focus on business partners and corporation, for instance, they work with some of the greatest companies in the world now, including Sony Music, Softbank, Rakuten Insurance, Yamaha and etc. (Ptengine, 2014).
The following major segmentation variables for business markets are demographics, behavioral variables, situational factors, purchase approaches, and personal characteristics that can be utilized for Ptmind in the business to business industry (Bases for Segmenting Business Markets, 2012).
Firstly, the industry, company size and location are the three basic factors of demographic variables. Ptmind gives organizations key and smart insights that rises radical change of their products and services. Moreover, Ptmind provides a platform that can turn the data insights into action and shows them exactly to their business partners on how people are using their products and make them know more about their consumers’ behavior and preferences. If Ptmind wants to expand its business into the Dutch market, it is better for them to mainly co-operate with the Japanese companies or Asian companies at the early stage since they have same demographic variables, and then move to approach more international and local corporations (Examples of Business Market Segmentation, 2014).
Secondly, it is about the behavioral variables and purchase approaches. A business consumer can use Ptengine to determine website traffics, where those traffics are coming from and what visitors are doing on their website when they enter the page. It enables decision makers to understand visitor engagement and operation improvement by using heatmap and analytics platform across any devices. There are different subscription models for business partners to choose from, it is good for small business or large- scale enterprise to select the right model based on their business needs (What segmentation bases are used for business markets?, 2012).
Last but not least, situational factors and personal characteristics. Ptmind deliver real time data to its business partners to help them to adjust their content strategy quickly and effectively. What’s more, Ptmind creates better user experience and provide excellent service by its professional attitude and quick response service. Practically, an easy-to-use feature on multi device help Ptmind to approach wider market and maintain brand loyalty (Ptengine Features, 2014).
4.2.2 Target Marketing
Target marketing involves dividing a market into segments and then concentrating marketing efforts on one or a few key segments (Target Marketing, 2014). For Ptmind, creating and developing specific strategies for the target market can be the key element to lead it to success. Online stores, digital music distribution services, online travel agencies can be the potential target group for Ptmind, because Ptengine offers different ways to analyze pages and set up conversion funnels to boost conversion rate in the digital market. Target marketing is the process of selecting exactly which one of the groups will be the main focus to spend efforts on. Once Ptmind knows the current market and understand customers’ behavior well, it will concentrate more on that particular segment and positions its services easily and specifically (What Is Market Targeting?, 2013).
There are three general strategies for selecting the target markets: undifferentiated targeting, differentiated targeting and concentrated targeting. Concentrated marketing is a marketing approach that is aimed at connecting with and delivering services to a specific consumer group. The concentrated marketing strategy is suitable for Ptmind to use and approach the target market, because concentrated marketing is an ideal approach for smaller businesses with limited resources such as Ptmind, so it will be beneficial for Ptmind to focus on the needs of one specific segment or particular group. For instance, Ptmind does not rely on mass marketing to reach a wide range of consumers, so this strategy enables them to tailor their services for that specific group and compete effectively against larger firms and competitors, like Google Analytics (Market Targeting Options, 2014).
4.2.3 Potential Partners
As was mentioned before, Ptmind should use the concentrated targeting to approach a specific group in the segment, in this case the Japanese companies in the Netherlands who share the same demographic variables and culture as Ptmind. If Ptmind is going to cooperate with Japanese companies, five potential partners can be: Canon Europa N.V.: a subsidiary company of Canon Inc. from Japan established in the Netherlands (Canon Europe, 2014). Asics Europe B.V.: a subsidiary company of Asics from Japan that specialize in sports clothing and sports equipment (ASICS Corporation, 2014). JTB - Japan Travel Bureau: a subsidiary company of JTB Corporation in Japan who specialize in tickets for travel tours to Japan (Travel Plaza Netherlands B.V, 2014). Yamaha Motor Nederland B.V.: a subsidiary of Yamaha Motor company in Japan which is the main distributor of Yamaha products in the Dutch market (Yamaha Motor Europe N.V., 2014). NNR Global Logistics Netherlands B.V.: a subsidiary of Nishitetsu Group in Japan who specialize in international shipping services in the Netherlands (NNR Global Logistics Netherlands BV, 2014). All of these companies are big companies that are well-established in the Netherlands, if Ptmind can cooperate with them it will be good for their image and reputation. If other companies can see that Ptmind is working with a big company such as Canon Europa N.V. and they are successful then they might want to change their web analytic platform and consider Ptmind.
4.3 Competitor Analysis
4.3.1 Porter's Five Forces Model
Threat of New Entrants
When entering a new market it is also important to consider the possible entry barriers and possibility of new firms entering the same market which results to strong competition in the same industry (Internet Center for Management and Business Administration, Inc., 2010). If Ptmind wants to enter the IT services industry in the Netherlands, one of the biggest threats will be the existing market players that provides similar services as Ptmind. According to Marketline, the Netherlands was ranked 4th by World Economic Forum in terms of IT infrastructure, indicating that the market is already very well developed. It might be difficult to enter the developed market and compete with big companies, since competitors such as Google, Orange Valley, IBM also provide similar web analytics services; e.g. IBM has acquired 4,000 analytics patents. Since Ptmind focus on B2B, another challenge will be that companies might not be willing to change their service provider because they cannot trust small newly established companies with little reputation. These can be considered as a threat for new entrants such as Ptmind that want to enter the same market (Marketline, 2014).
However, success of a company is mostly depend on their ability to anticipate and cope with challenges that they face so if Ptmind can differentiate themselves from the competitors with their services then they have chance to enter the market. Small companies in the IT market has grown over recent years because the government and many commercial companies usually outsource their own IT support to third party companies that specialize in providing IT support. Considering these matters, it can be concluded that the probability of new entrants in the IT services market is moderate (Marketline, 2014).
Bargaining Power of Suppliers
Suppliers of products or services in an industry can have a big influence on prices increases and services qualities (Porter's 5 Forces Model, 2006). In this case, for the IT services industry, suppliers can be considered as companies that are capable of providing IT support services with the technological expertise and knowledge to do so. As was mentioned before, the IT services market in the Netherlands is very well developed so this can signify that there is an increase in availability of IT specialist suppliers (Marketline, 2014). Competition looks fierce in this market and an increase in IT specialist companies will lower the extent of power of suppliers. If there are only a few suppliers or the supplier provide a unique differentiated services with only a few or no substitutes than the bargaining power of the price level will be high and increase the extent of power of suppliers (Peng, 2009).
However, there are many other web analytics providers that offer the same services as Ptmind, the biggest one being Google Analytics, so it can be assessed that power of suppliers is low in this market (Marketline, 2014).
Bargaining Power of Buyers
This force looks at the power of the consumers that can affect the products’ or services’ price and quality. For Ptmind, bargaining power of buyers is low, because Ptmind focus on the B2B market; their target groups are various companies and organizations, and buyers don’t have a significant impact on prices. For instance, to simplify the creation of user programs, Ptmind’s analytic platform allows customers to personalize or customize their own online analytic platform in order to help them to work more effectively and efficiently. It can be seen that different customers have different features and characteristic product, thus, the product’s differentiation level is high since Ptmind offer a tailored service for each client. Moreover, price is not fixed because it depends on the buyers’ needs and requirements. The service and technical skills which Ptmind provide are different from its competitors, so it is not easy for buyers to drive prices down. To conclude, the bargaining power of buyers is low (Porter's 5 Forces Model, 2006).
Threats of Substitutes
Substitute products or services are those that available in other industries can be used to fulfill the same or similar need for the end users. In general, the more substitutes that exist in the market, the larger the company’s competitive environment and the lower the potential for profit (Porter’s Five Forces Model - Strategy Framework, 2014).
For Ptmind, Google is their greatest rivals in the information technology industry; because Google Analytics provides similar online analysis techniques as Ptengine, consumers can switch their service provider easily from Ptmind to Google. Moreover, Google is a larger enterprise that has good reputation and professional corporate image around the world, thus, organizations or companies can easily find Google as an alternative. Not only Google Analytics, but there are many other substitutes available. According to a research done by Emerce, the top 5 web analytics provider in the Netherlands are Google Analytics, Omniture from Adobe, SPSS, comScore, Onestat International and WebTrends (Emerce, 2014). Thus it will be a big challenge for Ptmind if they want to expand their businesses and services in the Netherlands at the beginning stage (Competitive Forces Impacting The Technology Engineering Industry Today, 2014). Overall it can be concluded that the threat of substitution is quite strong in the IT services industry.
Rivalry Among Existing Competitors
Rivalry occurs spontaneously between companies that compete in the same market. Therefore, companies strive to provide unique products or services to maintain a competitive advantage over their competitors (Internet Center for Management and Business Administration, Inc., 2010). There has been an increase in developments of the mobile, cloud, and social network and web analytics technologies, thus it increases the chances for IT specialist companies to offer more value-added services to their customers and increase the degree of rivalry among them. Smaller companies are trying to distinguish themselves from competition by providing different kinds value-added services in one package. According to Marketline, the market value of the IT industry is expected to reach a value of 6.2 billion Euros with an average annual growth rate of 1.5%
by 2018 (Marketline, 2014). Overall, it can be assessed that the degree of rivalry is strong in the IT services market.
4.3.2 Potential Competitors in the Dutch Market
E-merce has done a research in the Dutch market to determine the best performing e-businesses. From these results, it can be seen that Google Analytics, Omniture and comScore are the three biggest competition for Ptmind’s web analytics platform. The results of their research on the top performing companies and web analytics platforms in 2013 and 2014 are shown below.
Source: (Emerce, 2013)
Source: (Emerce, 2013)
Results in 2014 can be seen below:
Source: (Emerce, 2014)
4.4 Market Entry Analysis
4.4.1 Generic Strategy
As was mentioned in the literature review, there are 3 types of generic strategies that a firm can use to gain competitive advantage over competitors in the industry and these are:
Cost leadership strategy
For Ptmind, their main competitor in the Netherlands will be Google, who provides a web analytics platform called Google Analytics. According to a survey conducted by Econsultancy and Lynchpin for 900 companies, more than 50% of companies use only Google Analytics as their web analytics tool, while 34% of them use Google Analytics in combination with other web analytics tools and 11% use different web analytic tools (Oosterveer, 2013).
Source: (Oosterveer, 2013)
There are also other companies that provides the same web analytics services as Ptmind. If Ptmind wants to enter the IT services industry in the Netherlands, they must evaluate their main strengths and see which strategy will be suitable for them to create a competitive advantage. The competitive advantage can be either low cost or differentiation (University of Cambridge, 2014).
Cost Leadership Strategy
The cost leadership strategy focus on low cost and prices, this means that Ptmind must offer the same or higher level of services as Google Analytics or other competitors against a lower price if they want to use this strategy. As was mentioned earlier, according to Econsultancy and Lyncpin, more than 50% of the companies use Google Analytics as their web analytics tools. One of the attractive features of Google Analytics is that it is free of charge. However, Ptmind offers mainly premium services with custom quotes depending on the choice of premium plans (Ptengine: Real- Time Heatmaps and Visual Analytics, 2014). In this case, it is clear that Google has a competitive advantage over Ptmind. Therefore, it can be concluded that cost leadership strategy is not a good strategic choice for Ptmind.
With the differentiation strategy, a company try to differentiate themselves and gain a competitive advantage by provide a product or services that are perceived by customers as unique and valuable (Griffin, 2013). Ptmind’s web analytics platform offers some distinctive features and qualities that are not available at Google Analytics or other web analytics platforms and this can become their competitive advantage for Ptmind. For example, compared to their main competitor Google Analytics, Ptmind offer the heatmap feature which is not available on Google Analytics (Zorzini, 2014). The distinctive features are highly valued by their customers. Thus, it can be concluded that the differentiation strategy is a suitable choice for Ptmind because this way they can set themselves apart from competition by differentiating themselves with the distinctive features to have a competitive advantage (Griffin, 2013).
With focus strategy, it means that companies should concentrate on a particular customer segment, and tailor their services for that group in order to gain a competitive advantage over competitors that focus on a broader range of the market (Griffin, 2013). The strategy can be either cost focus or differentiation focus. As was mentioned in the target market analysis, Ptmind can target Japanese companies established here in the Netherlands first since they have common demographic variables. Thus, a focus strategy might work well for Ptmind, because they can first focus on Japanese companies and tailor their services for this group and create a competitive advantage. This way they will be able to build strong customer loyalty and if they are successful within this specific group they can broaden their target market afterwards. As was mentioned earlier, Ptmind offer distinctive features that are not found at other web analytics platforms so it can be concluded that the differentiation focus strategy will be a good strategic choice for Ptmind to differentiate themselves from competitors (Zorzini, 2014).
4.4.2 Market Entry Modes
As was mentioned in the literature review, there are many types of market entry modes for companies to consider if they want to enter a new market. The modes of entry can be categorized into export, contractual, joint ventures, and wholly owned subsidiaries (Peng, 2009).
For Ptmind if they are only looking for partners instead opening a new office in the Netherlands, they can consider co-marketing, which is categorized under contractual entry mode, because they can make some agreements with companies to jointly market their services here in the Netherlands. This way they will be able to reach more customers and increase awareness for their web analytics service. However, the risk will be that coordination and control will be limited, because all the matters has to be discussed and negotiated by all the parties that are involved (Peng, 2009).
However, if Ptmind want to have their own subsidiaries here in the Netherlands, they can consider green field operation, which falls under wholly-owned subsidiaries, because this way they have full control over their business and they have protection over their proprietary technology and know-how (Peng, 2009). With green field operation, Ptmind will have more flexibility and freedom over their management and decision making processes. However, the risks involved are the costs, the slow speed of entry into the market and also cultural differences in some cases.
According to a research done by (Tanganelli & Schaan, 2014) on 146 Japanese subsidiaries, the main type of entry modes for Japanese companies to enter the European market was green field operations. As can be seen in table 2 below, 79 out of 146 were green field investments which amount to 54.1%. The second most used entry mode was joint ventures with 59 out of 146 and only 8 companies used acquisition as an entry mode (Tanganelli & Schaan, 2014).
The results can be seen below in Figure 1:
Source: (Tanganelli & Schaan, 2014)
4.4.3 Challenges in the Business-to-Business Market
The Netherlands is home to a competitive fiscal climate and friendly business environment in the heart of Europe. With an open innovation approaches and well-structured partnerships between public and private entities, there are many opportunities for firms that want to innovate and expand in the Dutch market. Therefore, it can be seen that Ptmind has many potential development in the Dutch market. However, Ptmind’s target group is concentrating on the business-to-business (B2B) field, it will face different challenges to integrate into the local business atmosphere (Top 10 Challenges Of Doing Business In The Netherlands , 2013).
The main challenges that Ptmind will meet can be summarize into the following categories:
B2B markets have more complex decision-making units;
B2B products are often more complex than B2C markets. For example, Ptmind’s target groups are corporation, different companies have different characteristics, thus, Ptmind analytic tool for different business partner will have different results based on their customization.
Personal relationships are more important in this market. Establishing long-term relationship with business partners is the key for Ptmind sustainable development.
B2B markets have fewer behavioral segments compare with the B2C markets (Segmentation Challenges In Business-To-Business Markets, 2014).
Therefore, if Ptmind enter the Dutch market, focusing on a segment with the same demographic variables and same culture will be easier for them. By focusing on one small segment in the market, they can tailor their services and optimize their services for this group of business partners and build customer loyalty in the long run with them. When they are successful in this segment, they can focus on a larger part of the market. This way they will be able to withstand strong competition that focuses on a broader range of customers.
4.5 Cultural Analysis
4.5.1 The Hofstede’s Cultural Dimensions
In this part, the cultural differences between the Dutch and Japanese market are discussed using the six dimensions: power distance, individualism, masculinity, uncertainty avoidance, pragmatism, indulgence (Hofstede, 1980).
Power Distance Index (PDI)
As can be seen, the Netherlands scored 38 compared to Japan with a score of 54. This means that the Dutch style is more independent and the hierarchy is there only for convenience, since power is decentralized among managers and there are equal rights among subordinates to voice their opinions to their superiors. Managers expect the employees to be participative and communication is more direct between the management. While on the other hand, Japan scored higher in this dimension. This means that they are more conscious about the hierarchy in the company and each decision has to be confirmed by the person at the top of the company. It is very important to respect the superiors.
In Ptmind, there are many Chinese and Japanese workers. Asian people tend to keep the hierarchy in society. For example, the boss is very strict with his subordinates. Therefore, if Ptmind establish a company in the Netherlands, it is important to take into account how they have to communicate with Dutch employees. The interaction between Dutch and Asian people can assemble more productive team rather than only among Asian people. However, Ptmind already have American and British employees, so they might get used to communication with other cultures easily.
Individualism versus Collectivism (IDV)
The Netherlands scored 80 in comparison with Japan with a score of 46, this means that the Dutch society is more individualistic. People are more independent and they are expected to think more individually instead of a collective group. In companies, relationships and hiring processes are more based on individual merit and mutual advantages. It depends on each individuals experiences. On the other hand, the Japanese society is more concerned about group harmony and if people tend to be more reserved about expressing their opinions (The Hofstede Centre, 2014).
Ptmind should be aware that the people in the Dutch society tend to be more open to express their opinions directly because they have a strong sense of independence and equal rights. For example, if Ptmind do a survey for their web analytics platform here in the Netherlands, it can result in getting more actual feedbacks from Dutch customers because they are very open to express their mind rather than Japanese customers who are more reserved.
Masculinity versus Femininity (MAS)
For this dimension the Netherlands scored 14 which is very low compared to Japan with a score of 95. This indicates that the Netherlands is a feminine society that focus more on keeping a balance between life and work. Managers are supportive of its employees and involvements are highly appreciated. When conflicts arise during negotiations, the Dutch are more concerned to compromise and reach a consensus between both parties. While Japan on the other hand, is a very masculine society. The Japanese individuals have more competitive behaviors that strive for perfection and becoming the best. Usually companies have long working hours and the social status of male individuals is relative higher in Japan and it is very difficult for female individuals to climb up the corporate ladders (The Hofstede Centre, 2014).
Ptmind is not a big company, and the CEO and management persons mainly consist of males. The working hours in Japan are longer compared to the Netherlands. Therefore, Ptmind has to take into account that it might be difficult for Dutch employees to work long hours since they focus on keeping their balance between life and work.
Uncertainty Avoidance Index (UAI)
For this dimension, the Netherlands scored 53 while Japan scored 92 which is very high in comparison. This means that the Dutch only has a small preference to avoid uncertainties, so the business attitudes includes accepting risks and changes and people tend to be more calm and curious about differences that occurs. While on the other hand, the Japanese are very concerned with avoiding as much uncertainties as possible. The Japanese society tend to have a lot of policies and rules in the organization and people tend to work hard because they work based on “time is money” (The Hofstede Centre, 2014).
Most Japanese companies tend to have various rules in order to avoid uncertainty in the future and in the employment environment. On the other hands, the Netherlands is very innovative country and entrepreneurial, so Dutch companies are not afraid of failure. When Ptmind enter to the Dutch market, it is possible that there will be various competitors in the same industry. However, Ptmind already have international market share and employees, so the innovativeness of the company will fit in within the Dutch market.
Long Term versus Short Term Orientation (LTO)
The Netherlands has scored 67 in comparison with Japan with a score of 88 in this dimension. This means that the Dutch society does has a pragmatic nature but not as strong as in Japan, so people tend to share their opinion openly and are not afraid of losing face, they tend to adapt easily to changes. While in Japan, the Japanese tend to value traditions and virtues a lot and have a very strong sense of work ethics. Education and training is highly valued by companies in Japan (The Hofstede Centre, 2014).
For this dimension there are not a lot of difference, however Ptmind still have to take in mind that Dutch people tend to be more committed to work for a company that rewards perseverance and the company should be prepared to be more open to different views and equality between genders.
Indulgence versus Restraint (IND)
For this dimension, the Netherlands scored higher with a score of 68 while Japan scored 42. This means that the Dutch society has a more indulgence nature, so Dutch people tend to realize their desires and have fun more easily while enjoying life. They are very optimistic and they are willing to spend their money to realize their desires. On the other hand, Japan’s society has a more restraint nature, so they tend to have strong control over their desires, work and family is more important than their own desires and thus they restrain their actions based on social norms (The Hofstede Centre, 2014).
As mentioned before, it will be difficult for Ptmind to apply a typical Japanese working style in which there are long working time and many rules for the Dutch employees due to this difference between indulgence and restraint. Dutch people tend to care more balancing their life and work and have fun while realizing their desires. Thus, Ptmind should incorporate shorter working hours in the Netherlands compared to Japan.
4.5.2 Laws/Regulations and Business Etiquettes
If Ptmind wants to do business in the Netherlands successfully, then they have to abide by all the local rules and regulations. Ptmind has to contact the Dutch Chamber of Commerce, who will provide them with further instructions on the procedures to establish a partnership or a subsidiary in the Netherlands.
Two major taxes that must be taken into account by Ptmind when they enter the Dutch market are value added tax (VAT) and corporate income tax.
VAT - Value Added Tax: value added tax is the tax paid to supply products or services to consumers. The rate is included in the prices of the service packages. Since Ptmind, the main supplier of the digital services, is established outside of the European Union they are required to charge a VAT rate to customers at the rate that is applicable at the country of the customer. The value added tax rate in the Netherlands is 21% (Doing Business in the Netherlands, 2014).
Corporate Income Tax: corporate income tax is imposed on the profits of companies. The standard tax rate is 25%, but a lower rate of 20% is applicable to taxable income up to 200,000 Euros. Foreign entities in the Netherlands have to pay one of these tax rate. However, non- resident entities have limited tax liabilities depending on the Dutch source of income.
While looking at business etiquettes, there are few differences in the Netherlands compared to Japan which Ptmind can take into account:
Business Dress Code
Bribery and Corruption
First, punctuality in business is equally important with regard to response and delivery times in the Netherlands. It is important to call ahead of time, if there are unexpectedly delay. Secondly, despite the fact that gift giving is popular in Japan, it is not a common aspect of business relationships in the Netherlands. The rules on flowers as a gift are the same as for most other European countries: no chrysanthemums or carnations. Thirdly, formal attire is normal in the banking industry and open-neck shirts and jeans are popular in the IT services and entertainment industry (Salford Business School, 2014). In most Dutch organizations, it is normal to wear a jacket, and to take the jacket off when they are working. Colorful shirt and tie combinations are very usual in the sectors like marketing and service industries. Lastly, according to the Corruption Perceptions Index for 2012, the Netherlands ranked 8th out of 177 countries with a score of 83% (Transparency International, 2014). Which indicates that the transparency rate of doing business in the Netherlands is very clear and the Netherlands has a good reputation as a honest country for trade with little corruption.
Source: (Transparency International, 2014)
Chapter 5: Conclusions and Recommendations
The future of the IT services industry looks very promising here in the Netherlands, because by 2018 it is expected to grow with an annual growth rate of 1.5% per year. The Netherlands also have a very open economy and the government offer low taxed and provide incentives to encourage foreign investments. The Netherlands also has a very well-developed data networks and IT infrastructure so the IT services industry is evolving very fast. All these macro- environmental factors make the Dutch IT services industry an attractive place for Ptmind to invest in.
Ptmind can first target a specific segment in the market and focus on this group in the early stage, they can focus on demographic segmentation to establish business relations with the potential partners. They can focus on concentrated targeting strategy in the Dutch IT services industry. It is recommended for Ptmind to focus on Japanese companies in the Netherlands first, because they have the same demographic variables and culture so it is easier to approach and establish a business relationship with them. Ptmind will tailor their services according to customer requirements. Five potential business partners for Ptmind are: Canon Europa N.V., Asics Europe B.V., Yamaha Motor Nederland B.V., NNR Global Logistics Netherlands B.V. and JTB - Japan Travel Bureau.
Rivalry among existing competitors is strong in the IT services industry, so in order to gain a competitive advantage in this highly competitive market, it is recommended for Ptmind to use the differentiated focus strategy as a strategic choice. Since Ptmind offer distinguished features that are not available at other web analytics platforms from competitors, this can be there main strength to gain a competitive advantage. Potential competitors in the Netherlands can be Google, Adobe, Netprofiler, Orange valley, and Online Dialogue.
While considering all the types of entry modes, it is recommended for Ptmind to use co-marketing if they don’t want to have an office in the Netherlands. This way, they will be able to reach more customers and increase awareness for their web analytics service, while at the same time they will be able to create business relations here. However, the risk will be that control is limited since all issues must be addressed by both parties. If Ptmind wants to have their own subsidiary here in the future, then it is advised to do green field investment because among 146 Japanese firms that entered the EU market, 76 of them chose green field investments thus it can be concluded that most Japanese subsidiaries uses green field to enter the European market. However, risks involved can be the slow speed of entry and the costs associated with green field investment.
The main cultural difference is that the Netherlands is a feminine country while Japan is a masculine country. The Netherlands focus more on individualism while Japan focus on collectivism. These factors must be taken into account by Ptmind if they enter the Dutch market in the future. Regarding business etiquettes, one of the big difference is gift giving. In Japan gift giving is very popular during business meetings while in the Netherlands it is not necessary. To do business in the Netherlands, Ptmind has to abide by all the local rules and regulations and two tax rates that must be taken into account by Ptmind when they enter the Dutch market are value added tax (VAT) and corporate income tax.
While looking at all these factors, it can be concluded that Ptmind has a lot of potential to develop in the Dutch market. They can focus on establishing relationships with Japanese companies in the B2B field. The main challenges is that rivalry among existing competitors is strong and B2B markets are more complex since each companies has different specific needs and characteristics. Thus establishing a good long term relationship with the business partners will be essential for their further development in the Netherlands.
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University of Cambridge. (2014). Porter's Generic Competitive Strategies (Ways of Competing). Retrieved October 28, 2014, from Institute for Manufacturing: http://www.ifm.eng.cam.ac.uk/research/dstools/porters-generic-competitive-strategies/
Ward, S. (2014). Target Marketing. Retrieved from About.com: http://sbinfocanada.about.com/od/marketing/g/targetmarketing.htm
Yamaha Motor Europe N.V. (2014). Yamaha Motor In Europe. Retrieved October 28, 2014, from Yamaha: http://www.yamaha-motor.eu/nl/corporate/index.aspx
Zorzini, C. (2014, September 09). Ptengine is Disrupting Website Analytics. Retrieved October 14, 2014, from InspiredMag: http://inspiredm.com/ptengine-disrupting-website-analytics/
Appendix 1: E-mail Attachments Related to the Projects
Dear Ms. Inoue,
Next week I would like to arrange an interview with you, so when are you available?
As I talked to you before, I am doing a project for a Japanese company Ptmind that want to enter to the Dutch market. I want to know the difference between the Netherlands and Japan, and want to have more information about Japanese companies which already do business in the Netherlands.
If we can meet together next week, we will make a specific research report to you.
Dear Sir/ Madam,
I am a student from Rotterdam Business School and I am currently working on a project concerning emerging market with a few classmates. Our project objective is to develop a marketing plan for Japanese companies to enter into the Dutch market successfully.
For our project, we would like to have some more information regarding the procedures that Japanese companies must go through with if they want to establish their business here in the Netherlands.
Is it also possible to give us some information about the most popular entry strategies and entry modes that are used by Japanese companies to enter the Dutch market?
If you could give us some statistics that would be highly appreciated and it will be very useful for our research.
If possible, we would also like to make an appointment to visit your office next week holiday or Friday to ask a few questions for our project. All the information will only be used for educational purpose and for our report. Thanks in advance and we hope to hear from you soon.
Marketing Minor Student
(Student number: 0844056)
Rotterdam Business School
Appendix 2: Activity Log
Date Time in Hours Task Description By Whom 09-09-2014 4 hours/ per person Come up with a few ideas about the individual assignment or task Mako, Qingyuan Guo, Yinglin Rong
Find more information about the specific idea and set up the individual assignment topic.
Mako, Qingyuan Guo, Yinglin Rong 11-09-2014 3 hours/ per person Mako: contact with the Ptmind company and find more sources about the company. Qingyuan & Yinglin: find more information about the online collaboration tool. Mako, Qingyuan Guo, Yinglin Rong
Read the information about the digital marketing.
Mako, Qingyuan Guo, Yinglin Rong 16-09-2014 2 hours/ per person Mako: download Ptengine and try it out. Qingyuan & Yinglin: find more online collaboration platforms and software try to download or register as users use it. Mako, Qingyuan Guo, Yinglin Rong
Write one A4 to describe why I choose this topic and short description about how to do.
Mako, Qingyuan Guo, Yinglin Rong
18-09-2014 3 hours/ per person Find more sources to support our topics. Mako, Qingyuan Guo, Yinglin Rong
15 minutes/per person
Have a consultancy meeting with Mr.Rog to discuss our individual assignment’s topic.
Mako, Qingyuan Guo, Yinglin Rong
19-09-2014 2 hours There were some problem with the “Open Class” platform, thus, Qingyuan & Yinglin turned to help Mako do the project with Ptmind. We have a short meeting to discuss more about this topic and company. Mako, Qingyuan Guo, Yinglin Rong
Do the desk research about Ptmind company and find more info about online analytics.
Mako, Qingyuan Guo, Yinglin Rong
22-09-2014 3 hours Start to do the individual assignment proposal which includes introduction part (Company background information) and come up with project objectives. Mako, Qingyuan Guo, Yinglin Rong
Have a group meeting to discuss the process so far.
Mako, Qingyuan Guo, Yinglin Rong 24-09-2014 3 hours/ per person Continue to work on the marketing proposal: choose marketing tools to use for conducting research, make a layout of report structure format and make a plan about literature review. Mako, Qingyuan Guo, Yinglin Rong
Group discussion about the project with Mr. Rog.
Mako, Qingyuan Guo, Yinglin Rong 25-09-2014 2 hour Make a fishbone and figures out the research questions together. Mako, Qingyuan Guo, Yinglin Rong
Modify the precious part and start to work on the methodology part.
Mako, Qingyuan Guo, Yinglin Rong 27-09-2014 2 hour/ per person Find more relative sources around the Ptmind company and find info relate the IT service industry. Mako, Qingyuan Guo, Yinglin Rong
Group meeting on Skype to discuss about the project process.
Mako, Qingyuan Guo, Yinglin Rong 30-09-2014 3 hours Start to do the industry analysis and search more info about the IT service industry and online platform analytic. Mako, Qingyuan Guo, Yinglin Rong
Keep in touch with the Ptmind company and try to e-mail contact with Japanese- Dutch Business companies in the Netherlands.
Mako, Qingyuan Guo, Yinglin Rong 02-10-2014 20 minutes Group meeting with Mr.Rog. Mako, Qingyuan Guo, Yinglin Rong
Modify the fish bone and research questions.
Mako, Qingyuan Guo, Yinglin Rong 03-10-2014 3 hours Face-to-face group meeting: modify the proposal and start to make a draft busines plan. Make a SWOT analysis for PTmind. Mako, Qingyuan Guo, Yinglin Rong
Each team member need to figure out 2 fishbone topic that relate to the sub research questions.
Mako, Qingyuan Guo, Yinglin Rong 06-10-2014 3 hours/ per person Thinking about the structure of our final report and do a desk research about the fishbone topic. Mako, Qingyuan Guo, Yinglin Rong
Group meeting to discuss about the process
Mako, Qingyuan Guo, Yinglin Rong
08-10-2014 3 hours/ per person Mako: Hofstede analysis Qingyuan: Targeting & Segmentation analysis Yinglin: PEST Analysis. All of these findings link it to the Ptmind. Mako, Qingyuan Guo, Yinglin Rong
Group meeting with Mr.Rog.
Mako, Qingyuan Guo, Yinglin Rong 09-10-2014 2 hours Modify individual part. Mako, Qingyuan Guo, Yinglin Rong
Face-to-face group meeting to discuss the next step.
Mako, Qingyuan Guo, Yinglin Rong 12-10-2014 3 hours/ per person Mako: email with Ms. Inoue and contact with Ptmind company. Qingyuan: do some research about the challenges Ptmind will encounter if they want to expand business in the Dutch Market. Yinglin: do the research about entry mode and strategies that Ptmind can be applied. Mako, Qingyuan Guo, Yinglin Rong
Mako: modify Hofstede analysis and PEST Analysis.
Qingyuan: use Porter's Five Forces Model to do competitor analysis.
Yinglin: do Porter's Generic Strategies.
Mako, Qingyuan Guo, Yinglin Rong 14-10-2014 30 minutes Face-to-face group meeting. Mako, Qingyuan Guo, Yinglin Rong
Modify entry model, strategy, segmentation and targeting analysis.
Mako, Qingyuan Guo, Yinglin Rong 15-10-2014 1 hour Send several e-mails to contact with the Japanese-Dutch Business club and organizations. Mako, Qingyuan Guo, Yinglin Rong
Literature Review/ Useful theory.
Mako, Qingyuan Guo, Yinglin Rong 16-10-2014 20 minutes Group meeting with Mr.Rog. Mako, Qingyuan Guo, Yinglin Rong
Modify fishbone and research questions.
Mako, Qingyuan Guo, Yinglin Rong 17-10-2014 3 hours Restructure the report and modify methodology part and literature review. Mako, Qingyuan Guo, Yinglin Rong
Modify the Literature Review:
Mako: Hofstede's Cultural Dimensions (Explain the model and theory)
Qingyuan: Segmentation Strategy (Name the model and explain model) & Target Market Strategy (Explain the model) & Porter's Five Forces model
Yinglin: edit PEST Analysis, Entry Modes, and Porter’s Generic Strategies. Send email to the Japanese of Chamber of Commerce.
Mako, Qingyuan Guo, Yinglin Rong 2 -10-2014 2 hours Modify the Methodology part. Mako, Qingyuan Guo, Yinglin Ron
Modify the research findings:
Mako: Hofstede's Cultural Dimensions Analysis that relate to the Dutch Market and Ptmind.
Qingyuan: Analyze the Target & Segmentation part. Find more sources to support our argument. Yinglin: edit PEST Analysis relate to IT Service industry, Entry Strategy & more sources to support the argument.
Qingyuan&Yinglin: Analyze the Porter's Five Forces Model (YL: Threats of New Entrants, Bargaining Power of Suppliers, Rivalry among Competitors QY: Threats of Substitutes, Bargaining Power of Buyers)
Mako, Qingyuan Guo, Yinglin Rong 26-10-2014 2 hours Skype group meeting. Mako, Qingyuan Guo, Yinglin Rong
Yinglin: make a phone to the Japanese of Chamber of Commerce and other companies.
Mako, Qingyuan Guo, Yinglin Rong 27-10-2014 3 hours/ per person Everyone improve and modify their own parts. Mako, Qingyuan Guo, Yinglin Rong
Group meeting at school.
Mako, Qingyuan Guo, Yinglin Rong
28-10-2014 3 hours/ per person Mako: modify hofstede's dimension part for the research findings, to be more specific. Qingyuan: find more data or sources to support argument on the target market and segmentation part. Yinglin: finish her own part of porter's 5 forces model and the generic strategies on research findings. Mako, Qingyuan Guo, Yinglin Rong
Mako: translate the e-mail with Ms. Inoue and put the exchange emails into the appendix part.
Qingyuan: find more information about potential business partners for Ptmind and modify introduction part.
Yinglin: put everything we have together and modify the grammar mistakes.
Mako, Qingyuan Guo, Yinglin Rong 30-10-2014 30 minutes Group meeting with Mr.Rog. Mako, Qingyuan Guo, Yinglin Rong
Restructure the report.
Mako, Qingyuan Guo, Yinglin Rong 31-10-2014 3 hours Modify the final report. Mako, Qingyuan Guo, Yinglin Rong
Face-to- face meeting. Do the executive summary, conclusion and recommendation together.
Mako, Qingyuan Guo, Yinglin Rong 02-11-2014 1 hour/ per person Write an individual personal reflection with lessons learned Mako, Qingyuan Guo, Yinglin Rong
Modify the appendix and structure of the report.
Mako, Qingyuan Guo, Yinglin Rong 03-11-2014 3 hours Final check of the complete report. (Grammar check& Plagiarism check/ Bibliography/Appendix) Mako, Qingyuan Guo, Yinglin Rong
Appendix 3: Self-Reflection and Lessons Learned
In the final year of my bachelor studies, it mainly focuses on the marketing field and digital marketing topics. For me, it was really busy in the first block of year 4, because I had to finish three good-quality assignments on time for my marketing minor program. Thus, time management becomes particular important during the process.
For my individual assignment, I worked with two group members, we need to make a marketing plan for a Japanese company to enter the Dutch market successfully. In this case, it requires us to apply the marketing theories and knowledge that we already learnt before into the real practice. I got many experiences and practices during this project. I understand that a specific plan and time management are two major factors that affect the project results. For our project, we planned to do the primary research in the early stage, thus we sent several e-mails to contact with the Japanese-Dutch Business Club and other existing Japanese companies in the Netherlands in order to get more relevant informations to help Ptmind. However, we didn’t get the satisfied reply. It was just like Mr.Rog mentioned in the consultancy meeting, project was not like a straight line, where everything went through smoothly. It would have many uncertain factors which are obstacles to the project process. Therefore, we took options to finish the high-priority work first so that we can get more value within a limited period. Based on that, we changed our plan and turned to focus on the secondary research to find more reliable sources to support our argument and statement.
In addition, it gave me advance preparation for the coming graduation thesis because I got a better overview about how to write a formal business plan for the company and learnt more about the structure of the thesis during this assignment.
During this block for the marketing minor, it was very busy because we had individual assignments, consultancy project and also team work assignment that had to be handed in every week. For the individual assignment, I worked on a market analysis report together with Qingyuan and Mako. We had learned about market entry strategies last year for emerging market, so it was easier for us to apply the theories we learned during that class to this assignment. Although I had a general idea on how each theory works, this project allowed me to go more in-depth to study the theories and apply them. It also taught me that primary research is quite difficult to conduct if you need input from real companies besides desk research. We tried to e-mail a few companies and I have called the Japanese Chamber of Commerce, but they were not able to provide any data for our report, thus I learned that sometimes not everything goes smoothly.
During the meetings with Mr. Rog I learned more about how the structure of a thesis report looks like and all the theories that he presented during the meetings were very useful to structure this report. Previously, I didn’t know how I had to link the theory with the topics of the fishbone but Mr. Rog explained everything during the meetings and now I understand how I have to link each research question with the fishbone and the theories. I learned a lot of useful things during this block thanks to Mr. Rog, which will help me to structure my graduation thesis report.
In this individual assignment, I found how difficult it is to apply the theory we learned in class to practice. Of course, on textbook we can see many strategies and tools which look useful for Ptmind and that there are similar examples for us to apply. However, each company has different situation and company size, so based on Ptmind we had to think about the best solution for entering the Dutch market (about the strategy and recommendations). In Japan, I didn’t have much practical experience, so for me it was hard to apply the theories in the report. At the same time, thanks to two team members who are familiar with the Netherlands, I could do this assignment for very short term. At first, I tried to do it by myself, because it is really specific topic, and I visited the company in Tokyo and talked to Mr. Ohara, who is one of our contact persons before coming to the Netherlands.
These days, many business people are not only marketers but also managers who is not familiar with the IT service, which focus on analyzing data related to their companies and industries in order to understand the needs of customers. However, not all business people can deal with the analysis properly. This is because the data is quite huge and complex. That is why I am willing to help Ptengine, a well-design and simple service, enter to the Dutch market where Ptmind didn’t expand to yet. I hope our research will be useful for Ptmind, and then Ptmind will decide to enter to the Dutch market successfully.