Business Report 2015 for Optimax Eye Laser Surgery

optimax

Executive summary

This business report provides a thorough analysis and evaluation of the possible internationalization strategy for Optimax, a UK based eye laser private clinic. The report discusses the main reactive and proactive motives for Optimax to enter international markets and provides arguments for choosing particular countries for the short and long term development. Qualitative and quantitative research strengthen the arguments for choosing international markets by measuring political, commercial, industrial and financial risks as well as analyzing the overall country attractiveness including competitors information and market data. It is further discusses the overall strategic approach to market entry, in a form of franchising, for the short term development. The report provides valuable arguments and statistics for the link between the target market and the Netherlands market information. The “Seven P formula” of marketing mix evaluates the Optimax business activities in the foreign market.

  • Introduction

The purpose of this business report is to identify how Optimax, a UK laser eye treatment clinic, can enter international markets. The paper provides a detailed and well-structured international marketing strategy for a business that is currently operating in the highly competitive market. It further discusses short and long term market selection propositions including standardization and adaptation to it supported by strong theoretical arguments. This report is written specifically for Mr. Russell Ambrose, the founder and proprietor of Optimax, in order to propose appropriate ideas and suggestions for business expansion from national to international level.

  • Reasons to go international

After initial success in the domestic market, Optimax has the capability to exploit the competitive advantage internationally. There are a number of reactive and proactive reasons for Optimax to go international. Despite the fact that Optimax has 28 clinics nationwide and a good reputation, the business may still perceive the competitive pressure from Optical Express, Ultralase, AccuVision and other eye laser clinics in the UK. A further reason is that Optimax has enough financial resources, innovative technology and has already shown the best results under the safety conditions that gives a clear motive to go into international markets and double the firm’s revenue and profits. This leads to other proactive motives such as the desire for business growth, the capabilities to enter foreign markets and to provide a reliable service. Optimax has been approved for having an excellent internal and external management since 1991 and currently the company has a managerial motive to acquire more experience and knowledge in foreign countries. Likewise, Optimax has successfully compete in domestic market and realized that it is no longer an option to stay only in the UK as they also have potential for development.

  • Market selection

Having considered both the proactive and reactive motives to go international with Optimax business, it is reasonable to choose the market or markets. Market selection is one of the most significant aspects towards the success of the internationalization process. Choosing the right markets and the right sequence of entry is an integral part of international competitive strategy. The Uppsala model of internationalization proposes that firms firstly select geographically and psychically close countries and then move to more distant countries. The following table illustrates a shortlist of six European countries which are psychologically and geographically close to the UK and provides environment and market analysis.

Country GDP per capita (USD) Population (million) Unemployment rate Psychologically close Geographically
close
Ireland 50,503 4.6 10.0 %
Germany 43,931 80.6 4.7 %
France 42,503 66 10.2 %
Netherlands 50,793 16.8 7.2 %
Belgium 46,877 11.2 8.5 %
Denmark 59,831 5.6 6.2 %

According to qualitative research, Ireland, the Netherlands and Denmark are the most suitable countries for Optimax to expand internationally for short or long term. Ireland and the UK have the common travel area, linguistic and cultural similarities, good political and economic relationships and the UK is Ireland’s biggest trading partner. Similarly, The Netherlands have a strong partnership relations with the UK and both countries are under a constitutional monarchy. Dutch-British trade is simple by good relations, transparent legal framework and financial service system, good transport solutions and close geographical proximity. The Netherlands and the United Kingdom work together within the European Union, NATO and the UN, and agree on subjects such as the European internal market, free trade and EU funding. It is essential to note, that 90% of Dutch people speak the English language. Denmark and the UK have close relations in terms of export as both countries are full members of NATO and the European Union. In Denmark, 86% of people admitted knowing and speaking the English language. (European Commission, 2012) Political, commercial, industrial and financial risks are quite low in these three countries what makes it especially beneficial and accessible for the UK based Optimax to enter foreign markets. There are a couple of reasons for excluding Belgium, France and Germany as international partners for Optimax:

  • Germany has a very competitive market due to its technological advances and innovations.
  • France and the UK are not psychologically close.
  • Belgium is expensive country to run a business. Language barrier exists.

The firm in international markets always deals with competitors in its own domestic market and in each international market it enters. The number, size and quality of competitors affect the firm’s ability to enter and compete profitably in a particular market. The graphs below provide information about direct and indirect Optimax competitors in Ireland, the Netherlands and Denmark.

Country: Ireland

Clinics Locations/sites No. of procedures Prices (approx.)
Optical Express 1 site in Dublin N/A €2,195 to €1,590
Laser Vision 1 site in Dublin N/A €1,990 to €3,990
Optilase 11 sites across Ireland 40,000 €795 to € 2,990
Wellington Clinic 1 site in Dublin Over 40,000 Up to €4,100

Country: the Netherlands

Clinics Locations/sites No. of procedures Prices (approx.)
Optical Express 1 site in Amsterdam N/A €2,195 to €1,590

Country: Denmark

Clinics Location/sites No. of procedures Prices (approx.)
ReLex (at Copenhagen Eye Centre) 1 site in Copenhagen N/A €2,000 to €4,583
  • Long term

Despite the fact that Ireland and the UK have good political and economic relationships as well as cultural similarities, Ireland market may be considered as a highly competitive for Optimax to enter. In a competitive world, it is difficult to create added value. In order to obtain a sustainable competitive position, Optimax managers need to understand the nature of the dynamics of the Irish industry what includes many points to consider, for example, competitors’ marketing programs and their behaviour, best distribution method and its cost, consumer behaviour and preferences toward the UK eye laser clinics. In general, it is quite difficult to determine the competitive structure of international markets and requires a specific amount of time, resources and skills in order to enter such a competitive Irish industry market. Similarly, the market analysis of Denmark justifies that Optimax has the potential to successfully expand internationally due to its low competition and cultural similarities, however, the transportation fee may be higher. The expenses in moving equipment or personnel from the UK to Denmark are higher than from the UK to Ireland, or the UK to the Netherlands. The table below shows the geographical distance from the UK to Denmark, the Netherlands and Dublin in kilometers.

From the UK, London to…
Denmark, Copenhagen The Netherlands, Amsterdam Ireland, Dublin
1,260 km 537 km 598 km

Adapted from Google Maps

Optimax can establish itself as a late entrant in Ireland and an early entrant in Denmark market. Being an early entrant in Denmark, Optimax need to be in a position to react or even better anticipate potential entrants and increase barriers to late entrant. Optimax can gain a competitive edge and grab the opportunity to take the best market place. However, the cost of being an early entrant can be high due to technology or distribution channel establishment as well as the risk level of failure in the market can be also high. Both, Denmark and Ireland markets, require a greater amount of time for market screening and strategy development for a long time in order not to fail during the internationalization process. Two timeframes below illustrates the Licensing entry mode for Ireland and Joint Ventures entry mode for Denmark for a long period of time.

Licencing
Licensing long term entry mode for Ireland

JV
Joint Venture long term entry mode for Denmark

3.2 Short term

According to secondary research and the market selection tables in Section 3.0, the Netherlands market seems to be the most attractive for Optimax for a number of reasons: very low competition, most of Dutch people go abroad (the UK, Turkey) to do eye laser surgery, low cultural and geographical distance, low level of risk to fail and high demand for experienced eye specialists. The following business portfolio matrix illustrates that the Netherlands is a highly attractive country and, similarly, Optimax compatibility level with this country is also high. The matrix concludes that both factors are very compatible and, in turn, create a primary opportunity for Optimax to enter the Netherlands market and operate successfully.

With country markets and product categories in those markets developing at different rates in different time frame, success often depends on entering the market at the right time and applying the right strategy at the right time (Clarke and Wilson, 2009), also known as timing of entry in to international market. On a small scale entry, Optimax should take the position of a late entrant due to the existence of competitor in the market of the Netherlands. By taking such position, Optimax takes the competitive advantage over its main rival Optical Express. Late entrants are often able to gain more knowledge and learn from the mistakes done by their competitors. Due to the low level of competition, Optimax is able to imitate the early entrant and, meanwhile, to work well as the firm has enough resources to compete. As a late market entrant, Optimax can succeed by adopting distinctive positioning and marketing strategies. The selection of franchising as an entry mode for Optimax can give a greater access to a foreign market in the short term. Potentially, the franchise system provides an effective blending of skills centralization and decentralization, and has become an increasingly important form of international marketing. (Ghauri, 2010) The below illustrated strategy timeline shows the establishment of franchising mode entry for Optimax for a short term. It has been divided into two main stages: stage 1 is all about business and marketing strategy development, market analysis, final evaluation and assessment of future actions. Stage two includes legal deliberate business strategy implementation in to a foreign country, marketing management tactics and monitoring the internal and external changes within the business as it may suddenly require an emergent strategy adoption.

short time framw

The overall strategic approach to market entry, in a form of franchising, for a short term for Optimax will be analysed and thoroughly explained in Section 4.0.

  • Overall strategic approach to market entry

According to the Uppsala model theory, the firm should choose low-risk entry modes first in order to succeed in foreign markets. Contractual agreements between franchisor and franchisee provide clarity of corporate aims and objectives and meanwhile generate cooperation and trust between both business partners. Franchising strategy (direct or indirect), a low-cost entry mode with low level of risk for the short period of time for Optimax, implemented into the Netherlands market can provide a greater degree of control and quick development of international market thus generating economies of scale. In fact, Optimax can increase its degree of control by training its franchisee in relation to policies, values and processes. The incremental or organic learning model justifies the reasons for Optimax to enter the Netherlands market first, as the most geographically and psychically close country, and Denmark and Ireland countries that increase the level of internationalization complexity of the firm. The graph below demonstrates the path to internationalization of Optimax.

1112

In term of adaptation, a key concept in international marketing, Optimax should keep its uniqueness and to develop an understanding and willingness to accommodate differences that exist in the Netherlands market. Ghauri and Cateora (2010) proposed a couple of basic requisites for cultural adaptation in foreign countries: tolerance, flexibility, humility, adjustability, ability to integrate, ability to command respect, liking for others, knowledge of country, curiosity and fairness. The following table describes the most important adaptation aspects that Optimax must take into consideration before entering the Netherlands market.

Aspects for adaptation
Ø  the Dutch people are conservative and pay attention to the smallest details
Ø  highly tolerant of individual differences
Ø  no poverty in the country
Ø  they are private people and do not put their emotions on display
Ø  the handshake is the common form of greeting (including children)
Ø  most Dutch only use first names with family and close friends
Ø  Dutch value their personal time (do not ask them to work late or come over the weekend)
Ø  punctuality for meetings is taken extremely seriously
Ø  the Dutch are detail-oriented and want to understand every innuendo before coming to an agreement
Ø  contracts are enforced strictly

Source: Kwintessential (2014)

Optimax, known for its high quality service standards in the UK, should follow a consistent level of quality in the Netherlands and make sure that services are performed in the same manner regardless its main franchisor. Optimax clients have confidence in their services because the firm has used an appropriate standard and has gone through independent assessment. Similarly, by having the identical standards in the Netherlands and the UK market, can help firms to improve communication, to stream internal processes and to minimise business costs and risks. (Gov.uk, 2014) The standardization area of personnel qualifications is particularly important to Optimax foreign market as it reflects the overall quality of the service what makes customers to choose Optimax. Due to the fact that the Dutch people strictly enforce contracts and agreements, it is more likely that Optimax, as the UK based firm, will be able to develop strong and trusted business relationships and agree on standardized terms and conditions with its Dutch partners.

  • Target market supported by market information

The majority of Dutch people wear glasses or contact lenses (Statistics Netherlands, 2013). For older people, it is exceptionally rare not to use glasses or contact lenses. 61% of people reported to wear glasses, lenses or other reading or visual aids occasionally in 2012, versus 57% in 2001. Interestingly, more women than men wear glasses or contact lenses in the Netherlands. People in their 40s wear glasses, while the rate for people in their 50s is more than 90% and nearly over-75s wear glasses. The percentage of people wearing glasses (57%) is much higher than the percentage of contact lenses wearers (12%). It has also been revealed that 9% of people tend to use both. According to the Netherlands Statistics (2013), full-time contact lenses wearers are generally younger and the rate is higher (79%) comparing with people wearing glasses (54%).

  • Branding and positioning

To launch a brand in a foreign market means deciding whether to portray the brand as local, global or from one of its origins associated with the product/service capability. (Clarke and Wilson, 2009) Optical Express, the main competitor for Optimax in the Netherlands market, left its brand name the same as it is in the UK. Similarly, Optimax should establish themselves with its brand name in the foreign market as it shows the quality, the experience the firm has and the individuality. However, it is recommended that the Dutch version of Optimax website contains more information about the company, its services and prices, the reputation it has in the UK and should be more oriented towards the Dutch customers’ preferences. Also, the word “optimax” sounds completely the same in the Dutch language, so in that sense, there should not be any misunderstandings or mispronounces with the Optimax brand name. Optimax brand could be positioned by emphasizing the attribute such as the service benefit or by implicit or explicit comparison with competitors.

  • The “Seven P Formula”

The table below analyses the 7P’s of marketing mix and provide arguments for each point.

 

Product

In this case, product means service or production. Optimax should provide a wide spectrum of services in order to meet customers’ requirements. Service should be provided according to the culture (Inc. Language)
 

 

Price

Optimax should consider the pricing factor in terms of service cost to the customer. It must be the same price as competitors’ or lower in order to successfully establish in the market. The price may go higher over time, if Optimax positions itself as the number one eye laser surgery in the Netherlands market.
 

Place

Optimax should open its first venue in Amsterdam as it is more likely to be noticed by people. (Amsterdam population 820,000 approx.)
 

 

Promotion

Optimax should invest in marketing programs, e.g. advertising (online and offline), PR (press releases, newspapers), promotions (vouchers, discounts, special sales) in order to increase awareness of the new service in the Netherlands. The use of online media (blogs, journals, forums) can help Optimax to get positive word of mouth
 

People

It is essential for Optimax to recruit and train the right staff in order to create a competitive advantage in the foreign market. The firm should follow its quality standards and show best practices in the Netherlands.
 

Process

All Optimax services need to be underpinned by clearly defined and efficient processes. This will avoid confusion and promote a consistent service. The process can include direct communication with the customers by emails, SMS, Live Chat on the website or professional free consultation in the clinic.
 

Physical evidence

Optimax clinic in Amsterdam must be well designed and simple. People must feel safe and calm. In that case, the firm will enhance customer experience and get positive feedbacks.
  • Conclusion

This business report for Optimax critically analysed and suggested the possible internationalization strategy in three countries, the firm’s cultural adaptation and standardization to it as well as the 7P’s of marketing mix. All the statements were supported by arguments, graphs and table in order to provide a clear understanding of Glocalisation continuum or Internationalization process.

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