ESLSCA University Case Study Ahmed Ashour, the Strategic Marketing Manager of El Sewedy Electrometers (ESE), was analysing the company sales. The major success ELSEWEDY that the company has been achieving locally made Ashour consider ELECTROMETER. expanding internationally. He decided to gather the company owners to present them with his idea of opening a branch abroad. Ashour had a couple of countries in mind that, in his opinion, could have great potential Czech Republic and Australia. Czech Republic Czech Republic is a new emerging country in Eastern Europe, with an increased GDP expectation. Ashour reasoned that an increased GDP would lead to an increased GDP per capita, the country's purchasing power and demand. In addition, Czech bonds were a "safe haven" as the country's borrowing level makes it less likely to face a Greek-style crisis. Accordingly, if there were problems in getting loans from banks, there would be other forms of safe funds that could provide ESE with cash. The Czech Republic's economy was transitioning from a centrally planned to a free-market economy (Capitalism) to become more stable and prosperous. The transitional phase caused investments to increase and the country to flourish, therefore indirectly demanding electrometers. The Czech Republic was located in the middle of Europe, which could be advantageous in facilitating any movement within the European countries. Moreover, the country had low labour costs making it attractive to foreign investment seeking resource efficiency. The Czech electricity market was liberated and customers were allowed to choose between different suppliers. The transmission system operator was established as a separate state-owned company The electricity market had revenues of $11.3bn in 2019. The electricity market consisted of different segments such as industrial, commercial, households, transportation, and other end users such as agriculture. Electricity prices for households had been increasing since 2010; however, it was lower than the European averages. Being a member of the EU, the Czech Republic was obliged to follow the EU regulation regarding the use of metering. Since electricity had the highest prices in CEE compared to the rest of the world, many customers could benefit from controlling their electricity consumption. Moreover, CEE countries were concerned with renewable energy, so upgraded grids were required. The electricity industry was dominated by three major players in the market. These three players had a market share of 95% of final customers' total consumption. Australia On the other hand, Ashour was intrigued to know more about the Australian market. He discovered great potential in Australia, as its economy had been consistently growing in the past 17 years at an impressive 3.5% per year and there was a high level of efficiency. Moreover, the government provided equal support to foreign investors as it did to domestic ones which would help ESE grow most quickly. In fact, Australia had a strong and flexible economy, which was the 14th largest in the world in 2019. Australia had a very strong economy that was based on its retail industry, including houses, department stores, schools, hospitals, etc. These industries indicated the possibility of high demand for electrometersESLSCA University because the economy was on the rise. The Australian Energy Market Operator (AEMO) required customers to install equipment to record their energy consumption. Consumers had the right to choose their own supplier and accordingly AEMO. The electricity consumption varied according to the business sector. The Australian electricity market was dominated by individual domestic customers (88%) followed by the business (12%). The Australian National Electricity Market indicated that price of elasticity was higher for industrial customers than for commercial residences. The demand for electricity had increased tremendously in Australia due to the growing use of power appliances such as air conditioners. Accordingly, the use of smart meters had increased recently in Australia. Smart meters allowed energy- users to self-manage their demand in response to price signals. Competition in the metering service in Australia had been very limited, which resulted in increases in the prices of meters. Australia had several electrical companies (both private and public enterprises) that distributed electrometers. Reaching a decision After assessing the country's attractiveness, the business development team at ESE had to decide on an appropriate mode of entry and develop sales forecast and a marketing strategy. The main choices of entry mode usually were either a wholly owned subsidiary (usually an acquired local company) or a joint venture. Another option might be direct export. After reading and understanding the case above, discuss the following questions 1. What are the pros and cons of expanding into these two countries? (2.5 Marks) 2. Which entry mode should the company use? And Why? (2.5 Marks) 3. Which international business strategy should ESE pursue? And Why? (2.5 Marks) Which staffing policy do you recommend ESE to adopt in hiring their people abroad? And Why? (2.5 Marks) Best Wishes O 2