Huawei: Entry into Antigua and Barbuda

Huawei: Company Overview

The company was established in 1988. Currently, it develops, produces and markets equipment for communication. It also provides network solutions for the players of the telecom industry. The solutions encompass data, mobile, fixed and optical communication networks. The company boasts of its global existence in the provision of telecommunication products and services. The company has worked through a strategy aimed at improving the quality of its products and services. As a result, it has exhibited positive increments in its returns. For instance, it realized sales worth $35.35 billion in 2012 corresponding to $2.47 billion net profit. Recently, Huawei has focused on the pipe and wireless business that have portrayed steady improvements in its performance (Ahrens, 2013).

The company has achieved a leading position on the global scene with regard to the provision of telecommunication networks. Therefore, the company serves more than 45 companies of the top telecommunication companies. It distributes its products and services to over 140 countries. It is evident that it provides telecommunication services to one-third of the global population. By 2010, the company had 110,000 employees. Approximately 50% of the employees are located outside China. The infrastructure of telecom networks includes wireless, core network and network infrastructure. Its products encompass mobile broadband devices, handsets, convergence devices and video solutions. The professional services entail System Integration Solution, Assurance Services and Learning and Development solutions. Figure 1 in the appendix indicates the company’s financial position.

SWOT Analysis

The strengths of the company encompass:

  • The strategy of the supply chain and the company are both geared towards enhancing customer experience;
  • The company has a strong IT support;
  • Each department in the organization is assigned to clear responsibilities;
  • There is a strong customer relationship between customers and local branches;
  • The employees of the company have exhibited sufficient competence and technical know-how;
  • The company enhances its growth and development through the adoption of on-job training.

Weaknesses

  • Unclear cost in the management of the supply chain since the installation team does not form part of the chain;
  • The organizational structure does not provide a direct communication with the customers;
  • Insufficient training that result into high employee turnover especially in abroad branches;
  • In the event of local business, the company finds it difficult to compete with local competitors.

Opportunities

  • Customers have a clear understanding of what they need from the market. As a result, the company can capitalize on specific customer requirements to gain competitive advantage;
  • The European market provides a good destination for the company’s products due to the effectiveness and efficiency of the product delivery system;
  • The supply chain is enhanced by government policy that encourages international trade;
  • The profitability of the company is enhanced by the reduced corporate tax.

Threats

  • The business environment is competitive as a result of stiff competition from local competitors;
  • The European market does not favor Huawei products and services;
  • The life cycles of telecommunication products are short. As a result, the company has to continuously develop new products and services that meet specific customer demands;
  • There is a strong consumer purchasing power due to the ever-increasing customer demands;
  • The cost involved in the acquisition of human capital is high;
  • As an international company, Huawei is expected to participate in corporate social responsibility and environmental protection endeavors. Subsequently, it incurs more costs to achieve the additional requirements.

Sustainable competitive advantage is guaranteed by a number of factors. To begin with, endogenous innovation has seen the company develop products in-house rather than seek foreign partnerships with other companies. The efficiency of the company’s R&D guarantees continued innovativeness that has propelled the company towards developing products that meet customer’s demands. International engagement with global firms has also played a pivotal role towards enhancing the success of the company. One of the most important strategies of the company concerns its initial focus on the local market. Consequently, it holds a greater share of the local market. Guaranteed government support and the access to sufficient credit have also been pertinent towards the corporation’s affluence (Ahrens, 2013).

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Currently, the company has a sufficient capital base that will be used to enter the market of Antigua and Barbuda. The Rich Communications Suite forms the main strategy of international marketing. For instance, the release of the RCS 1.0, 2.0 and 3.0 by the major telecom operators provided an operating platform for the company. Therefore, the company strived towards enhancing address book, messaging, content sharing and file transfer. By June 2009, the corporation had developed broadband devices, network address book, and multi-device environment and enhanced communication. The inclusion of the company in the social platform has also enhanced its marketing communication (Ahrens, 2013).

Country’s Profile

Antigua is an island that is located in Latin America and the Caribbean region. It has a population of 89,985 individuals. The country’s economic profile is pertinent to any multinational corporation that intends to enter the market. English is the country’s official language. By 2011, it portrayed a negative GDP growth (-5.9%). Its GDP per capita was 12,463 USD with an inflation rate of 3.15%. There are a number of aspects that the company has to consider prior to its entry into a foreign country (CAIPA, 2012).

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Adhering to the requirements guarantees smooth running of the business operations following the establishment of the company’s premises in the country. They encompass the starting of a business, acquiring of electricity and permits for construction of premises, available credit facilities and business registration process. Other aspects entail protection of the investment, payment of taxes, enforcement of contracts and cross-border trading. Furthermore, a company should know the prevalent regulation of the local market and the process of resolving insolvency issues (Word Bank Group, 2014).

Critical measures that determine the success of a corporation include the ease of business establishment in the country and the frontier-score distance. The latter indicates the distance to the best business performance while considering legal restrictions. The country is ranked 89th with regard to the ease of performing business. On the other hand, it portrayed a performance index of 62.64 in relation to the distance to frontier score by mid-2014. Reflecting on the performance of the country concerning the ease of establishing a business and frontier-score distance, the country ranked 102 and 83.28 respectively. Resolving insolvency issues, enforcement of contracts and cross-border trading aspects ranked 114 with 38.19, 76 with 61.26, and 89 with 73.58 respectively in the country. Furthermore, paying taxes, protection of minority investors and credit acquisition aspects ranked 159 with 54.51, 35 with 62.50, and 151 with 25.00 respectively. Lastly, registration of property, access to electricity and the handling of construction permits were ranked 141 with 55.44, 17 with 90.46, and 30 with 82.21 respectively.

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Establishing a business in the country starts from the business registration process that encompasses preregistration, registration and post-registration processes. Preregistration entails reservation and notarization of the business name. On the other hand, the registration process requires from an investor to establish the business in the largest business city of the economy. Social security registration and obtaining the company seal are part of the post-registration activities. Each procedure is performed on its own day. Only official costs are incurred in processing the business registration. The minimum capital is paid in the bank prior to the registration process. In essence, starting a business in Antigua requires 21 days for the registration of the business. It costs 10.2% of the per capita income and no paid-in minimum capital.

A reflection on the neighboring economies indicates that Antigua is ranked first with regard to the frontier-score distance and last in the ease of a business establishment. It has global performance indices of 83.28 and 102 respectively. The ease of starting a business and frontier-score distance of the neighboring economies include Grenada (86.7, 80), St. Lucia (86.7, 80), Trinidad and Tobago (88.33, 71), Dominica (89.27, 63), Puerto Rico (91.17, 48), and Jamaica (94.13, 20). Handling construction permits require from the investor to submit relevant documents such as clearances, certificates, permits, and licenses. In the case of Huawei, it has to submit all the essential notifications and receive the required inspections. The company should also obtain sewerage and water utility connections. Following the development or acquisition of a warehouse, the company has to register the premises. Excluding the time spent for gathering the information, each process is conducted on a separate day. Following the receipt of the final document, the procedure is considered complete. The company will only incur official costs.

It suffices to state that electricity is a significant basic necessity for any corporation. In Antigua, obtaining electricity involves a number of procedures. The process requires submission of the relevant documents to obtain clearances and permits. Next, the company is expected to complete the necessary notifications after which it receives the appropriate inspections. Later, the company would get external installation works. The purchase of materials required for the installation of electricity is performed at the company’s expense. Lastly, the company should conclude the supply contract prior to obtaining electricity supply. The entire procedure is expected to take a single day excluding the time spent for the acquisition of information. Minimal follow-up efforts are required during the process. Moreover, the company will only incur official costs during the process, not considering the value added tax incurred on material purchases (Word Bank Group, 2014).

Entering the market also necessitates registration of the property. It entails land administration. The company will undergo preregistration, registration and post-registration processes. The preregistration process involves notarizing agreements of sales, paying of taxes incurred during property transfer and liens checking. The property is supposed to be registered in the busiest city of the economy. Filing of the title is a post-registration process. All the procedures are performed on separate days excluding the time spent for information collection. It is only after the receipt of the document that the procedure can be considered complete. The company will only incur official costs to cater for the registration processes.

Since Huawei has enough capital to enter the market, it does not have to acquire credit in order to enter the market. Since there are no local telecommunication companies in the country, the company will not face the threat of the protection of local investment. However, payment of taxes is a mandatory requirement for any corporation. As a result, Huawei Company will have to meet all its tax obligations. The company will pay the consumption taxes that include VAT, goods or service tax, and sales tax. The economy’s revenue authority will be responsible for calculating the mentioned types of taxes. The company will be required to provide truthful information regarding its sales, goods and services.

With the aid of the relevant filing agencies, the company is expected to fill tax return forms. It is a good practice for the company to prepare distinct tax files to cater for its tax-related transactions. The total tax rate is expressed as a percentage of the profits that would be realized by the company. Subsequently, the company will be obliged to pay corporate and labor taxes, and make social contributions for its employees. The company should also pay property transfer and taxes. Other tax obligations that ought to be met by the company include dividend, financial transactions, capital gains, road, vehicle, and waste collection taxes.

The ability of the company to trade across the national borders of Antigua and Barbuda will be a significant platform on which the company can enhance its regional sales. The relevant documents that are required for importation of products include bank documents, customs clearance documents, transport documents, and port and handling documents. The exportation and importation processes require the company to obtain, file and submit the relevant documents. The process entails inland handling and transport. It also encompasses customs inspections and clearance, as well as terminal and port handling. However, this does not include the time taken to transport the products. Multiple costs are required in cross-border trading. They include the costs involved in documentation, inland handling and transport, customs inspections and clearance, terminal and port handling, and official costs. The economy has also displayed tremendous results in regard to the regulation of the labor market. For instance, there are no fixed term contracts in relation to permanent employees. Furthermore, a fixed contract does not have an upper limit of duration. Currently, the minimum wage per worker per month is 570.10 USD. The ration of the value added per worker to the minimum wage is 0.36.

The enforcement of contracts is pertinent to the wellbeing of a company in the event of commercial conflict resolution. Considering that the telecommunication industry is competitive, it is apparent that there would be a number of emergent conflicts regarding its patents. The transparency and efficiency of the court system encourages multinational corporations to invest in a country. The company should get assurance from the judicial system of the country that will be assisted in the event of customers refusing to pay debts. As a result, Huawei should be concerned about the steps involved in filing and serving cases. The steps involved in trials and judgments as well as judgment enforcement are critical to the success of a business in the event of commercial conflicts. The timing of the processes is also significant. The company expects a speedy process of resolving commercial conflicts in order to resume normal operations. However, the company will incur enforcement and court costs besides the fees charged by an attorney.

Market Analysis of Antigua and Barbuda

The country’s culture has an effect on marketing activities that can be conducted in the region. The culture is a fusion of both European and African beliefs and practices. The prevalent musical genres consist of African rhythms. As a result, advertising telecommunication products manufactured by Huawei should entail the use of popular African rhythms in order to win the favor of the country’s citizens. The culture also recognizes the significance of work ethics that target a common interest. There are multiple cultural expressions and events that the island supports and encourages. Huawei should also support and fund some of the cultural events so as to be recognized on the market. The events include The International Literary Festival, Domino and Warri Tournaments, Classic Yacht Regatta, also sporting events such as football, and recreational events (CAIPA, 2012).

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The components of the marketing mix encompass product, price, place, promotion, people, physical evidence and process. Since the country is a tourism destination, the country boasts of its value-added products that maintain its global position as a tourist hub. Tourism is the main service that the country offers. It sustains advantage over its competitors due to the fact that it provides a wide range of cultural expressions to tourists in order to enhance the tourism sector. The government knows the significance of the industry, thus, it has put in place incentives to motivate hotel and restaurant investors so as to boost the industry’s image. The citizens of the state fancy cultural expressions, recreational activities, and sporting events. The region provides easy access to electricity and transport facilities such as the international airport. Lastly, the processes involved in establishing a business are precise and less lengthy as compared to those in neighboring countries (IMF, 2013).

The country’s performance in harmonization and simplification of trade documents surpass that of its neighbors in Latin America and the Caribbean region. However, it exhibits dismal performance in regard to the availability of information, involvement of the community in trade, automation and advanced rulings. According to the e-readiness business survey report, computers are used in almost all the firms established in Antigua and Barbuda. In most cases, only senior members of the staff use computers. The extent of the Internet usage in the country is satisfactory. Most of the companies use the Internet to receive and send emails. However, there are some companies that use the Internet in e-business with regard to the management of customer relations and e-procurement. More than 62% of the surveyed companies affirmed the existence of a company website. E-business is prevalent in the tourism sector since the industry uses e-commerce to manage customer relations (Peiza, 2008). 

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The country uses the Eastern Caribbean Dollar (EC$), a currency that is shared by the members of the ECCU (Eastern Caribbean Currency Union). The country’s currency is issued by the Central Bank of the Eastern Caribbean region. The Central Bank is responsible for the management of the monetary policy, supervision, and regulation of the activities of other regional commercial banks. Currently, 1 US$ approximates to EC$ 2.8. With regard to marketing and sales channels, most importers use agents and distributors to introduce their products in the country. However, the relatively small size of the market does not permit the establishment of a distribution network.

The country has not designed specific legislation to govern the distribution of products in the country. However, the agents are not considered to be business partners or employee of the manufacturer. This excludes distributors that enter into long-term contracts with the company. Manufacture agents are responsible for the provision of sales and marketing team for the products of a company. They are also responsible for maintaining the interest of the company on the local market. An example is the Miami Consolidators. Even though direct selling is not a common practice on the market, Huawei Company can consider the option since it would be selling telecommunication equipment in large volumes. The country’s international airport is used as the hub for transport in the region. In general, road transportation is relatively cheap in the country; thus, it would reduce the expenditure that would be spent by Huawei for distribution of its products to local customers (Caribbean Export Development Agency, 2007).

 

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