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ACER COMPUTERS.

NUMBER 1: The factors in marketing environment responsible for Acer Computer mode of entry into the Russian market include: Political Economic Competitive Geographic Technological Socio cultural THE POLITICAL ENIVIRONMENT. The major influence of this factor on Acer Computer decision mode of entry to the Russian market by assembling it products in Finland was for fear of the governments legislation at that time. Russians tax code was a collection of more than 4,000 legal documents so contradictory and unsatisfactorily drafted that it made it impossible for any firm to obey it in full and Acer computer takes pride in being a law abiding organisation. Another political reason for this the event that happened to IBM. The government promised them an exemption from import duties on components but were still levied on them as a result of parliament opposing to this and on the other hand importers of finished computers enjoyed tax exemption. THE ECONOMIC ENVIRONMENT. The Finnish economy provided a special program to facilitate trade from Finland to Russia by offering a special custom regime tailored for firms trading with Russia by allowing them to bring in goods from outside the European Union and re-export them to Russia with a minimum of formalities. Acer Computer must have picked Finland for this because it is of great advantage to them because although it assembles it computers in Finland it still imports bulky and low-value components (like microprocessors, hard-disk drives e.t.c) from Asia and the United States. THE COMPETITIVE ENVIRONMENT. Another reason for Acer Computers choice of entry to the Russian market is the competitive advantage (i.e. image perception) they enjoy for producing in Finland. This means that their computers will be seen as white computers there is assembled in Western Europe which are considered the best made and will give them the chance to demand more in price compared to the red and yellow computers. This is because the

Russian have an attitude of categorising their computer market. Computer from Europe and American are white computers which have the best image perception, those from Russia red computers, and those from Asia yellow computers which are rated in between the white and red computers. This will make Acer Computer categorised a White Computer because it is assembled in Finland and give a favourable brand image. Another reason for it mode of entry to Russia was the fact that it was able to go into partnership with Wilson Finland which is an International freight firm and they could enjoy free shipping and flying in computer component from Asia and the United states and a partner with good knowledge of the market which they enjoyed from as Wilson helped to negotiate a good deal for a factory and provided financial assistance by putting in some capital. THE GEOGRAPHIC ENVIRONMENT. Although Acer computer had it target market in Russia, it chose to transfer it operation to Finland because the distance from Russia to Finland is not too far and Finland is a good location for other parts needed for the assembling of the computer that are flown in and transferred from Asia and the United states. Another reason was the concentration and easy access to Russian distributors in Lappeenranta in Finland were it factory was located as it was part of Acer Computers business strategy to sell to them and not directly to consumers. THE TECHNOLOGICAL ENVIRONMENT. Another reason for the mode of entry was that Acer Factory was located in Lappeenranta which was technological developed. It has a highly developed infrastructure which offered from good operation transport system to good warehousing system to good working of public utilities. Unlike Russia which could not even boost of having an up to date fire department in comparison to the alarm and sprinkler systems the big factories had. THE SOCIO-CULTURAL ENVIRONMENT. The attitudes and way of life of the Russian was a major influence for Acer Computer mode of entry to Russian. Russians are well known for corruption and criminal gangs. Russian borders were bought over with a few dollars, trucks were hijacked and drivers killed of gone missing. The most disappointing is that even Russians were unwilling to invest in Russian for fear of robbery and loss of capital which instead of being invested in the business are used to hire guards and weapon for security. Finland offered security and there were no high light on killing like in

Russia were the Motorolas Russian manager was assassinated by professional killers. Another reason was the image perception Acer Computer enjoyed because the computer were accepted as white computer which gave them competitive advantage and premium status in the Russian market.

NUMBER 2: Acer computers options for its mode of entry to the Russian market include; Exporting, Licensing, Joint Venture, Direct Investment. EXPORTING. Exporting means to send or transport (e.g. a commodity) abroad, especially for trade or sale. This option of market entry will involve Acer Computers marketing and directly selling their domestically-produced (Taiwan) goods in Russian. Since exporting is a well established method of reaching foreign markets Acer Computer would not encounter and difficulty with access to Russian market. All Acer Computer will have to do is transport it computers either by shipping or flying it to Russia where the goods will be sold. Strength of exporting. The advantage of this for Acer Computer is it will maximise its economies of scales as it will still be using it existing facilities and producing in a larger quantity which will lead to decrease in average cost per unit of computer produced. Weakness of exporting. The biggest weakness for Acer Computer entering the Russian market by exporting from Taiwan will be transporting costs. By transportation cost I mean any cost Acer might incur in transferring its computers to Russian in terms of shipping or flying. Transportation cost will be very high compared because Taiwan to Russia is very far apart and the only means of reaching Russia from Taiwan to Russian are shipping and flying which are very expensive especially for bulky goods. LICENSING.

Licensing means to grant authority. This will involve Acer Computer (licensor) permitting a Company in Russian (licensee) rights to use any of its intangible properties like production techniques, trademarks or even its patents for an exchange fee. Strength of licensing. The advantage of licensing for Acer Computer will be it leads to high return on investment. This is because licensing will require little investment from Acer computer, enable speedy entry to Russia and enable it to bypass trade barriers. Weakness of licensing. The major disadvantage is the licensee can become a competitor because it has gain sufficient knowledge from Acer computer granting rights to production techniques and also because license period is limited. JOINT VENTURE. Joint venture means coming together of two or more companies into partnership. This will involve Acer computer and another company or other companies establishing a cooperative business agreement in an effort to share risk and use differences in expertise to favour them in the Russian market. These company/companies do not necessarily have to be Russian. Strength of Joint venture. Joint venture will be of advantage to Acer computer as an entry mode to Russian because it overcomes restrictions and psychic distance especially if the company it is in partnership in is Russian or was part of the soviet union as they are most likely to have a very close psychic distance and part any Eastern Europe Trade organisation. Weakness of Joint venture. The major disadvantage Acer computer is likely to find in using joint venture as its mode of entry to Russia is difficulty in management and control. This might be as a result of cultural clashes, conflict of ideas and knowledge, the company may become too complex to control, mistrust and so on. FOREIGN DIRECT INVESTMENT. Foreign direct investment (FDI) is the direct ownership of facilities in the target Country. FDI will involve Acer computer transferring their resources such as capital, technology, and personnel to Russia or by simply by acquisition on an existing company.

Strength of Foreign Direct Investment. The advantage of Acer computer using FDI as its mode of entry to Russia is it provides a high degree of control of operations and the ability to know better the consumers and competitive environment. Weakness of Foreign Direct Investment. The disadvantage of FDI for Acer computer will be it involves a high level of resources and degree of commitment as new cultural ways will have to be learned, high cost in setting up the business and the lengthy process of adopting laws (in terms of registering business, taxation e.t.c.). PREFERENTIAL CHOICE OF ENTRY MODE. My preferential entry mode for Acer Computer into Russia will be joint venture. Acer establishing a joint venture with a local firm gains to enjoy from their good knowledge of system in terms of knowing the law which will ensure conforming to government regulations, established communication networks i.e. suppliers and distribution networks and a better knowledge of consumers which can be used for adjusting products to match local demand along with the fact that various technology and ideas will be joined Although entering a joint venture has it own disadvantages, it is still a better option for Acer compared to the other entry modes were a licensee can be a competitor, there can be loss of control of goods in abroad, high transport cost or High risk when there is high psychic distance, just to name a few. REFRENCES. Article. MANAGEMENT BRIEF Laptops from Lapland. The Economist September 6th, 1997. Text Book. THE GLOBAL ENTREPRENEUR: Taking Your Business International. By: James F. Foley. 1999 Dearborn Financial Publishing, Inc. United States of America.