Business Report on Dental Prima
The Firm’s Specific Advantages for its Internal Environmental Assessment
Accessing Foreign Markets and their Buyers
Key Global Environmental Issues
Political, Economic, Social and Technological Environments
Key Challenges and Opportunities in Foreign Markets
Market Entry Modes
Structure and Control Mechanisms
Logistics & International Business Operations
Future Implications
Prima Dental is based in Gloucester in the United Kingdom and has a legacy of more than 150 years. It is among the oldest of dental companies in the UK (Primadental.com, 2016). The company produces a wide range of high-tech tools that are used for dental treatments the company has business all over the world. The company has been achieving double-digit sales growth in the last few years and considers itself a global leader in precision dental products. The core competencies of the company include its extensive research work that helps it to come up with new and innovative products. The company has a skilled team of employees which gives them a competitive edge (Primadental.com, 2016).
The core vision of the company is to produce a better design, better engineers, better dental products and better distribution partners that drive the company to greater market share. Quality is of prime importance for the company and it strives to ensure that the customers are delivered the world’s best precision dental products all the time. The company has been in the business of dental manufacturing for more than 150 years now. Its rich heritage and legacy have helped the company to make a mark in the market. The company also strives to look ahead of its time and maintains close ties with the customers to provide the right products (Primadental.com, 2016).
The Firm’s Specific Advantages for its Internal Environmental Assessment
From the evidence and the information that is available in the public domain about Prime Dental, it can be said that the company has been able to maintain a steady income and market share over a very long period due to its outlook of being able to look ahead of its time (Primadental.com, 2016).
Brand Name
The first basic advantage in its internal environment that gives the company a healthy edge over its competitors is its brand name and reputation, especially in terms of the quality of the products it produces. Over the last 150 years, the company has been able to steadily provide a quality product to its customers that have enhanced its brand image (Johnson, 2003).
Innovative Culture
The work environment within the company is such that it fosters innovation and urges every employee to think out-of-the-box. The company has a policy of encouraging new ideas and encourages employees to speak out their minds. The company utilises new ideas and innovations to design and manufacture new products that are demanded by the customers.
Skilled Workforce
The company has a policy of encouraging and retaining skilled employees that have helped them to build up a strong team. The company boasts of the strong team of engineers and researchers and hence is able to develop new products. The company also conducts training programs for the employees to enhance skills (Cadle et al., 2014).
Continued Investments
The company has undertaken a policy of constant investments in technology, marketing, the employees as well as the business partners and the company claim that the success is partly due to this.
Accessing Foreign Markets and their Buyers
Prime Dental has its business sin about 90 countries outside of the UK. Very recently it started operations in India and Brazil where it has started sale and distribution centres. The main drivers for the company when it tries to find out and make an assessment of a foreign market is to study the demand for the products in the foreign market survey is a must for the company (Gfirstlep.com, 2016). However, since the company has a strategy of high-growth and high-volume business as a manufacturer, the international sale is critical for the company. At present, the international sale of the company accounts for more than 80% of its total revenues.
The significant investments that the company makes in research and production facilities back in the UK are among the main drivers for assessment of international markets. In a foreign market the company assess the demand for the innovative products that it manufactures (Cadle et al., 2014). While the potential demand for the products in a foreign market is one of the drivers for assessment Prime Dental also has a robust global marketing policy and it verifies whether that marketing expertise can be applied successfully in a foreign market (Southwestbusiness.co.uk, 2015).
Since the company makes quality products that are premium priced the economic conditions fo a foreign market and the suitability of the price range of its products for the market are also driving factors. This explains the entry of the company into emerging markets like India and Brazil where the company made and assessment of the demand as well as the price sensitivity of the customers in these markets (Bateman, Lovett, and Brainard, 2003). Another important driver for the company in a foreign market is to assess the potential of developing local manufacturing bases in the foreign market so that supply can be made to the local markets. One example is the joint venture of the company with Angelus Prima Dental Ltd. to set up a manufacturing unit in Brazil very recently (Southwestbusiness.co.uk, 2015).
Key Global Environmental Issues
The key global environmental issues that impact Prime Dental when it makes an assessment of a foreign market include:
Economical — since more than 80% of the revenues of the company come from exports, the overall global economic environment is critical to its sustainability. The company has to consider the economic environment of the globe as well as of the particular region and the market before deciding entry. The economical factor is a key global phenomenon that impacts Prime Dental in more ways than one. While making an assessment about a foreign market, the ability of the market to sustain the business costs of the company and the potential for return and gaining of further investments are important considerations for the company (Westney, 2011). If the general economic condition of the globe or the region is not good, the company cannot hope to make any significant revenue gains from entering into a new market.
Technology — the products that are manufactured and marketed by Prime Dental are sophisticated in nature and require the most state of the art technologies to produce. Even, the after sale service is sophisticated. The company continuously tries to innovation his through constant investment in innovation and research. However almost every other competitor of the company is engaged in similar research work and it is a fact that in the present globalised technologically advanced world, new technologies emerge every now and then. Some of them even are path breaking and have the potential to change the face of competition. Hence, the company has to carefully consider the technological advancements being made in the world and the region where it wants to enter and take into consideration the technological position of competitors in the new foreign market (Katavi?, n.d.).
Political, Economic, Social and Technological Environments
For this part, we choose the company entering Brazil and setting up a joint venture manufacturing unit there which it has done very recently.
Economic factors — since the company produces quality products that are priced at a premium, it has to look for markets which are doing well economically so that there are enough customers in the market to buy their products. Brazil is a fast-growing economy and the economic condition of the country is good which can help the company earn more revenues (Katavi?, n.d.)
Political Stability — In every foreign market that the company intends to enter, it has long-term plans. Therefore, its policies and strategies are so designed for the long-term. Political instability would jeopardise the plans and strategies and hence this is a critical factor. In Brazil, the political environment is more or less stable and there is no threat of any long-term or drastic change in its economic policies and hence, Prime Dental would be comfortably placed in Brazil.
Legal Framework — it is important that the foreign market that Prime Dental assess to enter should have flexible legal frameworks to allow it to set up and run a business either independently or in a joint venture. For this, the rules and regulations should be such which promotes foreign direct investment in the foreign market and has good laws that facilitate business. For example, the company would not want to set up business in e country that has poor labour laws and risk the potential of labour unrest (Preston, 2000).
Technological expertise and Local skill – The products that are manufactured by Prime Dental are sophisticated and are of the best quality in the world. The company has a policy of setting up manufacturing units in foreign countries. Therefore before deciding to enter a new market, the company has to look at the state of technological advancements in the market and the skill set that is available in the local labour market to be able to successfully run a manufacturing unit. Brazil is a country that has trade agreements with a number of countries that enhances the chances of better technology getting into the country. This means that the company would be able to get adequate technological support for its manufacturing unit as well as a skilled labour force for production (Preston, 2000).
Social Structure — the social structure of a new market has to be such that it would accept the products and the services that are provided by the company. The social acceptance of the products is critical. Being a product from a foreign country, the company has to assess the extent to which the society is willing to accept the product and whether the products conform to the social and cultural parameters of the new foreign market. Moreover, the way society would view a marketing campaign conducted by the company is also an important consideration for the company.
Key Challenges and Opportunities in Foreign Markets
Opportunities
The primary opportunity for Prime Dental for starting operation in Brazil is the huge local market of the country. With economic development of the country, people have more money and would be able to afford the products of the company. Additionally, the company recognises Brazil as the probable fastest growing dental market in the world.
Another important opportunity for the company in Brazil is that from Brazil, Prime Dental would be able to better reach and serve the other neighbouring countries of the continent thereby enhancing chances of increased revenues.
There is very little international competition in Brazil as Prime Dental is the first international company to set up a production unit in the country as well as the first to do so in South America- a very large market.
Challenges
The major challenge for Prime Dental in Brazil would be to make products that are suited according to the needs of the local customers and the dental problems that require the most treatment there.
Another challenge for the company is to price the products in such a manner that they are affordable for the local customers. By setting up the production unit in Brazil, however, Prime Dental hopes to reduce the cost of the products somewhat.
Considering the above arguments, Prime Dental has more opportunities than challenges. It has a culture of innovation and adaptation in its production and design and hence would be able to make products according to the local demands. The huge Brazilian market and the larger South American market are incentives enough for it to open operations there. Moreover, the little international competition in Brazil will make it easier for the company to penetrate the market and gain market share quickly.
Market Entry Modes
There are three foreign market entry modes for Prime Dental.
Direct Entry — where the company enters the foreign market alone and sets up business there all on its own through the foreign Direct Investment mode.
Joint Ventures — the company can team up with a local company in the foreign market to form a new company to conduct its business (Pan and Tse, 2000).
Franchise and licensing — Prime Dental can choose to grant permission another company to use the brand name and products in the foreign market without the UK company directly getting involved in the local market activities and receive a fee from the local company (Chanakira, 2012).
Structure and Control Mechanisms
Since Prime Dental is a producer of precision dental tools and products, it has to maintain a certain level of quality and standard that has set it apart from its competitors in the market. In this respect and considering the three foreign market entry that has been discussed earlier, it is most suitable for the company to enter into joint ventures for foreign market entry. The structure of such an alliance should be in the form of a new company that has operations and is registered in the new market. The structure could have dual control shared with the partner company as well as sharing of the investments and the profit and losses. The advantage of using such a structure for Prime Dental is that this would make entry into a foreign market a lot easier. The risks and uncertainties that are associated with entry into a foreign market would be significantly reduced (Pan and Tse, 2000).
The teaming up with a local player means that Prime Dental can make use of the existing expertise and the knowledge of the local player about the local market and not worry about making new recruits. Moreover, the local players would already have well-established networks and market sources and would be aware of the needs and wants of the local customers. Thus, Prime Dental would save on time in conducting extensive research about the local market and customer behaviour. Moreover, the risks of business would be reduced as the company would start with an advantage of already knowing the local market (Chanakira, 2012). Hence, it is suggested that Prime Dental use the joint venture mode as a preferred strategy for international business.
Logistics & International Business Operations
Prime Dental has a robust legacy of manufacturing and production of precision tools and gadgets that date back to more than 150 years. Over the years, the company has been able to expand its production capacity from its production base in the UK as well as set up new centres in other countries. As a part of the logistics overhaul, the company has a very well established channel of suppliers and distributors with whom the company has been working for a long time. Thus, the company is never short of quality raw materials for production. Moreover, the company constantly invests in the improvement of its logistics and production facilities. For example, the company invested some £2.8 million into the business for augmenting its production capacity as the company make rapid expansion into the international markets and therefore strengthened its logistics to support that expansion (Primadentalgroup.com, 2016).
Added to this, the years of experience and the skilled and dedicated workforce of the company that is present with it augment its logistical and skill support. This was evident in the company opening up a production facility in Brazil as the company entered the South American market for the first time as a part of its international expansion drive (Primadental.com, 2016). Thus, for Prime Dental the robust logistics backing — especially its production capability, its skill sets and its dedicated suppliers and distributors, has facilitated its international expansion.
Future Implications
One of the future challenges that Prime Dental can face in the future with respect to its international expansion and operations is a shortfall in talent (Amante Garcia and Martinez Martinez, 2014). With technologies fast developing and the industry the company operates in is significantly dependent on technological advancements that can impact production and product popularity, the company needs to be aware of and adapt to changes in technology. However even after adoption of new technology, the company might find it hard to get adequate skilled people to run the show in terms of production. For example, a change in technology can prompt the company to make changes in its production process. Any such change requires a reorientation of the human resources involved. The company can be faced with a challenge in a foreign market in terms of getting adequate talent that can adjust to and address the challenge of technological change This is a factor that can disturb international business for the company. Such challenge can be faced by the company both in its home country of UK and in other parts of the world where it has set up production units like the one in Brazil.
References
Amante Garcia, B. and Martinez Martinez, M. (2014). Internationalization: Changes and challenges chasing internationalization targeting. J. Technol. Sci. Educ., 4(1).
Bateman, I., Lovett, A. and Brainard, J. (2003). Applied environmental economics. Cambridge, UK: Cambridge University Press.
Cadle, J., Eva, M., Hindle, K., Paul, D., Rollason, C., Turner, P., Yeates, D. and Cadle, J. (2014).Business Analysis. Swindon: BCS Learning & Development Limited.
Chanakira, M. (2012). Factors Affecting the Choice of Market Entry Modes in the African Telephony Industry. International Journal of Applied Behavioral Economics, 1(2), pp.1-15.
Filippetti, A. (2011). The Global Environment of Business. Global Policy, 2(3), pp.354-354.
Gfirstlep.com. (2016). Export growth leads to Queen’s Award for Prima Dental – GFirst LEP. [online] Available at: http://www.gfirstlep.com/News/Export-growth-leads-to-Queen~s-Award-for-Prima-Dental / [Accessed 14 May 2016].
Johnson, E. (2003). Walking the Talk: The Business Case for Sustainable Development. Environmental Impact Assessment Review, 23(1), p.131.
Katavi?, I. (n.d.). International Business In Changing Global Environment. SSRN Electronic Journal.
Pan, Y. and Tse, D. (2000). The Hierarchical Model of Market Entry Modes. Journal of International Business Studies, 31(4), pp.535-554.
Preston, L. (2000). Environmental Challenges to Business. ruffin_darden, 2, pp.205-218.
Primadental.com. (2016). About Prima – Prima Dental. [online] Available at: http://www.primadental.com/corporate / [Accessed 14 May 2016].
Primadental.com. (2016). Approach – Prima Dental. [online] Available at: http://www.primadental.com/corporate/approach [Accessed 14 May 2016].
Primadental.com. (2016). Expertise – Prima Dental. [online] Available at: http://www.primadental.com/corporate/expertise [Accessed 14 May 2016].
Primadental.com. (2016). News – Prima Dental. [online] Available at: http://www.primadental.com/corporate/news/story/world-leading-uk-bur-manufacturer-enters-indian-dental-market [Accessed 14 May 2016].
Primadentalgroup.com. (2016). News – Prima Dental. [online] Available at: http://www.primadentalgroup.com/corporate/news/story/prima-dental-invests-2.8m-in-major-expansion-and-creates-17-new-jobs [Accessed 14 May 2016].
Shih, K., Chen, H. and Chen, J. (2006). Assessment of sustainable development and knowledge of environmental management. Industr Management & Data Systems, 106(6), pp.896-909.
Southwestbusiness.co.uk. (2015). Prima Dental group MD Richard Muller explains the importance of exports to the Gloucester company — Blog. [online] Available at: http://www.southwestbusiness.co.uk/regions/gloucestershire/11112015084805-prima-dental-group-md-richard-muller-explains-the-importance-of-exports-to-the-gloucester-company / [Accessed 14 May 2016].
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