F -X C h a n ge                                                                                                           ...
F -X C h a n ge                                                                                                           ...
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Strategy in the Global Environment by SEM


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In this essay, you can easily know how SEM do strategy in the global environment.

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Strategy in the Global Environment by SEM

  1. 1. F -X C h a n ge F -X C h a n ge PD PD ! ! W W O O N N y y Strategic Management: The Case of SOE Electric bu bu to to k k lic lic C Cw w m m w ww w o o .d o .c .d o .c c u -tr a c k c u -tr a c k Strategy in the Global Environment SOE Electric and Machinery Co., Ltd is the successful private and Myanmar national owned leading company in manufacturing, distribution and power transformers. This company was established on 30th August 1993 and start from that day, this company is emphasized only on the local market. Because of the ASEAN Free Trade Area in 2015, most of the Myanmar is now trying to take preparations for joining the emergence of AFTA. Therefore some companies start to extend their market shares in international market. Among these companies, SOE Electric and Machinery Co., Ltd is the one. Receiving Certificate of ISO 9001:2000 and ISO 9001:2008 for Quality Management System will also force SOE Electric to enter into the international market for its electronic equipment. Therefore SOE Electric decided to export the transformer to Vietnam. SOE Electric and Machinery Company will export 160 KVA transformers and two 315 KVAs to Vietnam. There are four basic strategies that can be used for the global expansion. However among these strategies, SOE Electric decided to use the international strategy because this product doesn’t required to get the high local responsiveness. Moreover for the location economies, Myanmar is better than the Vietnam in the area such as operation cost, labor cost and transportation cost etc. However because of the international strategy, they cannot get the experience of the status of Vietnam market and Vietnam customers. This will be the disadvantages for entering into the other countries. For the advantages, they can transfer their distinctive competencies to foreign market. Making a global expansion is so risky and costly. On the other hand, this is the first exporting for SOE Electric. Therefore this can be said that SOE Electric enters into foreign market by exporting mode. However SOE Electric makes an agreement with the local Vietnam Company, HNK Group of Vietnam which is engaging in the heavy industries and hotel services, to avoid the problems with local companies. In this agreement, both of these companies are agreed to bilaterally exchange technologies between them and then according to the agreement, two engineers of the company will be sent to Vietnam for attending the training courses targeting with technicians of Vietnam. From the exporting entry mode, SOE Electric will overcome the weakness of ability to realize local market. Therefore SOE Electric will become to know about the status of Submitted by Group 6 Page 1
  2. 2. F -X C h a n ge F -X C h a n ge PD PD ! ! W W O O N N y y Strategic Management: The Case of SOE Electric bu bu to to k k lic lic C Cw w m m w ww w o o .d o .c .d o .c c u -tr a c k c u -tr a c k local market although it will take more time than the other entry modes. From the disadvantages point of view, the transportation cost will be higher than the other modes because the assembly has done in Myanmar. Moreover because of the trade barriers, SOE Electric will cost more and sometimes the agreement will be rejected because of the trading law. And then the agreement is depend on the local company therefore SOE Electric will need to make a good relationship with the local partner. However in this case, SOE Electric doesn’t need to worry about this because of the agreement. In conclusion, at the current moment SOE Electric is experiencing unprecedented success in the local market. Most of the companies are doing exporting only in Myanmar and this strategy, international strategy, is the most suitable strategy for Myanmar. Therefore we assume that the international strategy which is used by SOE Electric is the most suitable for them and start from this; they will get a chance to upgrade their strategy. And then even this is only exporting, because of the agreement SOE Electric can get a chance to get the technical experience as an advantage. Submitted by Group 6 Page 2