Assignment 2

SWOT OF MAGIC PULSE

Strength
 Have a high quality and reliable
product meeting customer needs
 Integrated text messaging feature
which had a potential in New
Zealand
 Provided comprehensive software
solution by renting Kitomba product
and data back for customer
 Kitomba product low-cost structure
with a facility to respond rapidly to
changes in the market.
Weakness
 Small market (New Zealand)
 Limited resource
 Limited finance
 Not an effective marketing strategy
for their product
 Only two-part time software
developers
 Only concentrate of saloon industry
 Not clearly differentiating the
Kitomba product from other
products.

Opportunities Threats
 Expanding internationally  Substitute for Kitomba product

Franchising Licensing Direct Indirect

Exporting Exporting
A B C D E
Importance
Entry mode weighting AxB AxC AxD AxE
selection
criteria (1-10) Value Score Value Score Value Score Value Score Comments
Degree of 4 36 1 9 3 27 2 18  Franchising
control 9 gives maximum
control for the
Magic Pulse
over Kitomba
product.
 Licencing the
company won’t
be having
control.
 For Direct
marketing even
though control
will be there,
right now Magic
Pulse doesn’t
have the
finance for
direct
marketing.
 Indirect
marketing will
have less
control over
operations
Summary
Franchising is
favourable,
followed by
direct
marketing,
Indirect
marketing and
then Licensing.
Risk & resource 5 50 2 20 3 15 2 20 Franchising will have
commitment 10 minimum risk as no
investment is required
from the parent
company. The partner
will invest so no risk
associated with money.
Resources will be
trained by partners.
Even though no
resource allocation is
necessary for licencing
there is a very high risk
associated with it.
Direct exporting at this
point is not possible for
the company as it is
costly and indirect
exporting risk factor is
little bit more than
other three entry
modes.
Summary
Franchising is
favourable followed by
direct, then licencing
and indirect

Skill 3 12 4 16 2 8 4 16 Indirect exporting and

requirements 4 Licencing requires less
skills. Franchising
requires for training the
staff and controlling
operations and Direct
exporting requires more
skills compared to other
three areas.
Summary
Licencing and Indirect
exporting requires less
skills so maximum
points for those two
followed by franchising
and indirect exporting
Risk of IP 5 10 2 4 5 10 2 4 Risk of IP dissemination
2 is minimum is
dissemination
Franchising among all
other entry modes.
Licencing has a risk of
partner becoming a
competitor. Indirect
exporting have a risk of
third party and direct
exporting have less risk
but the cost factor is
more.

Flexibility & 5 35 2 14 3 21 1 7 Franchising and direct

7 exporting is two option
feedback
where the company is
able to get feedback
and flexibility. But
according to current
condition of Magic
Pulse, it is not possible
for them to directly
export as it is costly.
Indirect exporting and
Licence will completely
lack feedback and
flexibility. But
sometimes in Licencing
the partner can give the
flexibility and feedback
Speed to 1 7 4 28 3 21 4 28 Indirect exporting and
market 7 Licencing provides a
quicker way to enter a
market as they have all
their channels set up. In
franchising and direct
exporting requires time
to set up

5 45 2 18 2 18 3 27 The profit margin will

Profit margins 9 be more for franchising
as they require less
investment and well as
get a good share in
return. Licencing is only
one-time payment.
Indirect exporting
involves third party, so
their will be less profit
margin. Even though
direct marketing gives
more profit, it requires
huge investment.

Total weighted Franchising is the best

entry mode = 195 =109 =120 =120 market entry option for
score Magic Pulse ltd
(Kitomba)
 Australia United United States
Kingdom
A B C D
Importance AxB AxC AxD
weighting
Evaluation criteria Comments
(1-10) Value Value Value
Score Score Score
(1-5) (1-5) (1-5)

External (market) influences

Demographics: 4 12 2 6 3 9 Among the three
population, GDP per countries Australia is
capita/growth rate 3 having a better score.
So When considering
the demographic
Australia is the best
3 12 4 16 1 4 option.
UK has the maximum
Cultural & institutional
affinity with New score, followed by
Zealand 4 Australia and US. For
cultural and
institutional affinity
UK is the best option.

Market entry costs/ 5 35 3 21 1 7 Australia has the

7 maximum score
legal issues
because of its similar
legal structure and
less entry cost
followed by UK and
then US

Market size (number of 3 27 4 36 5 45 US is having the

salons) 9 maximum score due
to its big market size
followed by UK then
Australia. So
considering the
market size US is the
best option.

Market growth potential 9 4 36 1 9 5 45 US has a maximum

score as it has more
growth potential
followed by Australia
and UK.
Number/strength of 4 32 2 16 1 8 Australia gets
competitors 8 maximum score due
to the less
competition in the
market compared to
US and UK.

Internal (Kitomba) influences

Strategic 4 28 2 14 1 7 They can improvise
objectives, goals 7 their current strategy
in Australia but need
to change their
strategy in UK and US

Reputation, market 5 35 2 14 1 7 The company have

share of Kitomba
7 maximum market
share in Australia, so
the score is maximum
for Australia the
followed by UK then
US.

Market networks, 5 35 2 14 1 7 The market network

connections 7 is more in Australia
compared to UK and
US. So Australia as
maximum score.
Market experience 5 4 20 2 10 1 5 They have a good
market experience in
Australia, so
maximum point
Total weighted country Australia is the best
score =272 =156 =144 market for Magic
Pulse ltd (Kitomba)

Australia UK US

Demographics According to According to According to

population, GDP per IBISWorld(2017) IBISWorld(2017), the IBISWorld(2017), the
capital growth rate Australia HairDressing HairDressing and HairDressing and
and Beauty Service Beauty Service Beauty Service
industry produce $5bn industry in UK industry in US is
with an annual growth produces a revenue of having $44bn
of 1.3%. It is close to $4bn with annual revenue with an
New Zealand. So It got growth -$1.2. Because annual growth of
a rating of 4. of the decreasing 1.8%. Even though it is
annual growth rate it having good GDP and
got rating 2 growth rate, it is far
away. And right now
the company doesn’t
have finance. So it got
rating 3
Cultural and Australia is having UK is having similar According to Kennel
institutional affinity similar type of cultural type of cultural and and Akoorie (2013)
with New Zealand and institutional with institutional with New America and New
New Zealand. But in Zealand. According to Zealand is having
spite of the cultural Magic Pulse Ltd (2012) major cultural
similarities Australians UK and New Zealand difference so it will be
prefer their product is having similar very difficult to
over a kiwi product. culture. So Kitomba penetrate. So it get
They prefer a separate can easily identify the the lowest rating 1
identity from New difference is culture
Zealand. Because of (Magic Pulse ltd,
this the rating is 3 2013). But there will
(Magic Pulse ltd, be some small culture
2013). conflicts So it gets a
rating of 4
Market Entry Cost/ According to Kennel According to Kennel According to Kennel
Legal Issues and Akoorie (2013) and Akoorie (2013), and Akoorie (2013), in
Australia and New UK is having historic US high cost of
Zealand are having connection with New establishment, visa
similar legal Structure Zealand and similar constraints for
and required no visa. legal framework. But business, different
It is less expensive and under new European legal framework as
have similar legal Union trade protocol well as trade
frameworks. CER trading will be difficult constraints make it
agreement would with UK. Market Entry difficult. Because of
facilitate trade. So it cost is also high due to these factors it gets
gets a maximum the currency rate and rating 1
rating of 5 operating cost. So it
gets a rating 3
Market Size (No: of According to According to According to
Saloons) IBISWorld(2017) IBISWorld(2017), UK IBISWorld(2017), US
Australia is having has 41,047 hair HAS 1.0m hair
29,054 hair dressing dressing and beauty dressing and beauty
and beauty services services which is more services which is
which is less than Australia. So it highest among the
compared to other gets a rating 4 three countries. So it
two options so it gets gets a rating 5
 a rating 3
Market growth According to According to According to
potential IBISWorld (2017) IBISWorld(2017), UK IBISWorld(2017), US
Australia is having a saloon industry has a saloon industry
saloon industry growth rate is growth rate of 1.8%.
growth rate of 1.3% decreasing by -1.2%

Number/ strength of According According According

competitors Datanyze(2017) in Datanyze(2017) in UK Datanyze(2017) in US
Australia there are there are about 36 there are about 42
about 28 Appointment appointment schedule appointment schedule
schedule software software which is software, which is
which is less more compared to highest among the
compared to UK and Australia. So it get a three countries. So it
US. So the rating of 2. gets 1.
competition is less. So
it gets 4 not 5 because
there are competitors

Strategy objective, In Australia the In UK still they are In US they need to

goals company is already not succeeded. They create a noticeable
established, so right also have very less market share by
now their strategy market share and the understanding US
should be to increase market growth is market more.
their current market decreasing. So their
and diversify their strategy should be to
business. diversify and choose
another industry

Market share of According to According to According to

Kitomba Datanylze (2017), Datanylze (2017) Datanylze (2017)
Kitomba has 7% Kitomba has 0.67% Kitomba has 0.01% of
market share in market share in UK the market share in
Australia US
 Market Network, The company is The company have The company have
connection having good market less market share in less market
share in Australia, so UK compared to share among
they have good Australia but little all the three
market connections bit more than countries. So
in Australia. So it Australia. So it gets it gets a
get a rating of 5 a rating 2 rating 1.

Market Experience The company has a The company has The company has
good market share in less than one market least market share in
Australia which share in UK so their US compared to
implies that they market experience is Australia and UK
have a good not that good. which implies that
experience in they have very less
Australia experience in US.

Demographic
Australia
https://www.ibisworld.com.au/industry-trends/market-research-reports/personal-services/
hairdressing-beauty-services.html
USA
https://www.ibisworld.com/industry-trends/specialized-market-research-reports/consumer-
goods-services/personal/hair-salons.html

https://www.datanyze.com/market-share/appointment-scheduling/New+Zealand/kitomba-
market-share