Export Strategy Research Paper

The long-term goal of a company in a market economy is to increase its value. To do this, the company seeks to maximise its profits, leading effective activities and increasing its competitive advantages. Entering foreign markets, companies set the strategic goal of ensuring access to resources, access to markets, access to a variety of preferences and favourable business conditions, economic effects of development (synergy effect, economies of scale, the economic effect of outsourcing). It is important to understand that a higher level of risk characterises work on the international market compared to the domestic market due to differences in cultural, economic, political, legal conditions, a higher level of competition and requirements for product quality, and a higher level costs associated with international marketing research and product sales. An effective method is to internationalise the company via e-commerce.

Europe is a potential region for promoting internet business. Growth will occur mainly due to the increasing number of users of mobile devices and the Internet in emerging markets, the penetration of mobile sales, the development of delivery and payment options and the entry of international brands into new markets. As a result, considering the changes in production technology, expansion and improvement of product distribution channels, shortening the life cycle of modern high-tech products, there is a change in the system of relationships between market actors, which, in turn, leads to a transformation of the market structure.

ICT Market’s Costs Analysis
Hi-fi audio systems relate to the information and communication technologies. An analysis of the ICT market shows that the highest share of income from this sector is observed in China (6.9 percent) and Germany (4 percent), and these countries are the leaders of the world economy in terms of GDP. A key role in fostering the growth of e-commerce platforms in the Asian ICT market is played by the Chinese company Alibaba, which interacts with customers in more than 200 countries and successfully competes with the American companies Amazon and eBay. Among the countries that have the greatest progress in digital competitiveness in the period, China should be noted, which is associated with promising opportunities in sales markets and innovative technologies. Germany uses the digital potential of 10 percent. One of the components of the development of the ICT market in the world is the number of Internet users. Thus, the largest increase in the number of Internet users is observed in China – 4.4 percent. This trend is explained by the fact that in China already 52.2 percent of the total number of residents is already covered by the Internet. At the same time, in Germany there is a slight increase in users, due to the almost complete coverage of the country by the Internet. The volume of the Chinese information and communication technology (ICT) market will grow by an average of 7% per year and reach 6 trillion dollars by 2025, contributing to the increase of effectiveness and profitability of businesses (Lam and Li, 2017). Sales in the Chinese market will grow in 2019 by 7.5 percent to 5.636 trillion dollars. China has the highest share of online sales in the world – 35.3 percent of total retail sales. Alibaba occupies more than half of the market (53.3 percent), but the company’s share is declining. In 2019, the volume of e-commerce in China is expected to exceed 1.989 trillion dollars, with the result that the country will account for 55.8 percent of global retail online sales.

Germany is the largest ICT market in Europe, accounting for about a quarter of the European market for cash flow. Innovation has become the industry standard, especially in small and medium enterprises. The increased demand for high quality and innovative products is driving the growth of the domestic ICT market. Germany is embarking on a far-reaching digitization program that promises to transform the economy. A cumulative annual growth rate (CAGR) for the period from 2014 to 2018 is 6.3 percent. Moreover, there was a 5.7 percent increase in ICT market revenue in Germany to more than 19 billion euros. This growth trend is expected to continue until 2019, with a CAGR forecast of 5.5% for the period from 2016 to 2019. Analysts gathered data and realized that Germany is the most evolving ICT market.

Since the company focuses on the internationalization via e-commerce, its development is of a high importance. For several years, foreign companies viewed China as a growing sales market with 1.3 billion potential buyers (Lam and Li, 2017). The Chinese e-commerce market will grow to 1.8 trillion dollars by 2022. The e-retail market now accounts for 10% of the country’s GDP. In the first two months of 2019, the volume of online retail sales of physical goods reached 1.1 trillion yuan, up 19.5 percent over the same period last year (Lam and Li, 2017). Electronic retailing remains an important force in stimulating consumption. Its growth is significantly higher than the growth in retail sales of consumer goods. At the top of the Chinese market structure is a small premium segment serviced by foreign companies that receive solid margins and fast growth. Below is a large, low-cost segment serviced by local firms that offer low-quality products at prices 40-90% below premium. In the middle is a fast-growing middle segment. The middle segment in China is increasing due to recent shifts in consumer preferences.

Germany is one of the most promising countries for the development of e-commerce business in Europe. Internationalising business to Germany, there is a need to consider the safety of electronic payments, logistics organisation, and high-quality customer service. The main obstacles can be a complex legislative and tax system and strict observance of laws on confidentiality. In Central Europe, Germany remains the leader in e-commerce. It generates 25% of the total turnover in the region. E-commerce will be almost 50% of Germany’s GNP by 2018. According to statistics, more than 77% of the German population is present online (almost 63 million), which makes the country the most important European online shopping market. 8Sixty-eight million Germans, which is 84% of the population of the country shop on the Internet. The annual turnover in 2020 will amount to 100 million euros (Morgan, 2018). Large international organisations also demonstrate an interest in determining the factors influencing the development of the Internet trade market from the point of view of the buyer.

In particular, UNCTAD (2016) for the first time presented the index of the development of e-commerce in the B2C sector for 130 countries. The index is based on four parameters, including the use of the Internet, the number of secure servers, the prevalence of credit card payments. The index allows assessing the country’s readiness for online commerce and identifying factors that constrain the potential of the market or allow it to be strengthened. According to the index, Germany showed high readiness for e-commerce, while the leaders among emerging markets are the Republic of Korea, Hong Kong and Singapore. However, online services offer commercial prospects for companies, but at the same time, they require considerable one-time and regular investments. Global spending on software for the e-commerce platform reached approximately 4.7 billion US dollars. According to Gartner’s research centre, the e-commerce platform market will grow from 2015 to 2020 at the CAGR level, which is more than 15%, including revenue, licenses and maintenance. As a result, Germany is a potential region for internationalization of business.

Benefit’s Analysis
There are studies that study the factors that both impede making online purchases and stimulate this process (Chaparro-Peláez, Agudo-Peregrina and Pascual-Miguel, 2016; Corbitt, Thanasankit and Yi, 2003). The online shopping drivers in China include the benefits, including saving time, as well as ease of delivery and payment. In addition, the expansion of the range, attractive prices and improving the quality of online stores (a complete description of the goods offered, a description of the guarantee) increase the value of online purchases and encourage buyers to make them more often (Iglesias-Pradas et al., 2013). The presence of reviews of other buyers about making online purchases contributes to the formation of trust in the process of online trading, and also determines the reputation and image of online stores.

Internationalisation via e-commerce significantly reduce transaction costs, simplify, and accelerate exchange operations. The above factors largely determine the main advantages of Internet commerce in China, which allowed it to gain impressive growth rates. Information technologies unite counterparties in the B2B segment into a single chain that allows instantly responding to customer requirements, monitor stocks, track and accompany transactions, and be in constant contact. Accordingly, this results in a reduction in the costs of the logistics chain, at the stage of supply and other parts of the production process. Internet commerce technologies allow the elimination of intermediate links in the distribution chains, as well as significantly reducing distribution channels. The globalisation of the market reduces the cost of finding the right products, necessary and reliable partners (Gregory, Karavdic and Zou, 2007). In these conditions, a situation arises where sellers and buyers will be able to conclude a greater number of sales transactions with a minimum change in prices. These conditions characterise a liquid market. On the contrary, for Germany, it is possible to identify several key factors in the growth of online commerce, which include the development of mobile Internet and an increase in the audience of its users, increased customer experience with the Internet, growing number of buyers who prefer online shopping to retailers (Xing, 2018). Additional incentives for market growth can be the development of online hypermarkets with a wide range of products and an increase in the number of retailers implementing the omnichannel strategy.

Risk’s Analysis
According to the Scopus reference database, over the past 15 years, researchers have shown sustained interest in studying the factors hindering the development of the e-commerce market and contributing to this (Pavlou, 2003; Wymer and Regan, 2005; Al Qirim, 2007; Kuo, Chen and Chen, 2011; Lian and Yen, 2014; Turban et al., 2017; Saridakis et al., 2018). It is possible to distinguish studies that differ in level of analysis (online commerce in general/a separate online store); focus on developed or developing markets; the object of study (company/buyer); the degree of customer involvement (market participant/potential market participant). Despite the fact that sufficient attention is paid in the scientific literature to the consideration of barriers and drivers for the development of the e-commerce market, focus on consumers is only a small part of the work (Metzger, 2004; Pavlou, Liang and Xue, 2006; Rodríguez-Ardura, Meseguer-Artola and Vilaseca-Requena, 2008; Lian and Yen, 2014). The barriers that occur when making online purchases are mainly analysed, and only a limited number of publications are devoted to drivers (Daniel and Wilson, 2002). At the same time, a number of factors stand out that restrain Internet users from intending to make a purchase. One of the most frequently encountered barriers is a distrust of Internet commerce in general and of the Internet as a channel for making purchases, in particular, of infrastructure supporting online purchases, and of market players — online stores. In addition, the features of online purchases, including the need to share confidential personal information, the inability to inspect and evaluate the quality of the goods until it is received, the possible difficulties associated with the return of money and warranty service, limit the growth of online shoppers.

The German e-commerce market is one of the fastest growing retail segments and accounts for a significant share of German’s digital economy. At the same time, for many years the development of the market was driven by the growth of the country’s Internet audience and purchasing power, which contributed to an increase in the number of buyers starting to make purchases on the Internet. However, the further growth and development of the market from a consumer position largely depend on the configuration of barriers and drivers that online shoppers encounter when shopping. Online stores should strive to level down barriers that impede shopping, and also understand drivers of the development of the e-commerce market.

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