Texas Instruments in South Korea
Understanding a target market’s needs and desires can assist companies with tailoring their offerings in the name of profit. Texas Instruments (TI) had been business since 1930. During this time they have reinvented their offerings to remain a viable business entity throughout the decades. Their ability to stay ahead of the change curve has translated into a current market cap value of approximately $47 billion ("Yahoo finance," 2014). Whether it is calculators, semiconductors, software or education materials TI has been able to continually transform itself using a strategy predicated on “risk taking and innovation” ("Texas instruments," 2014).
It is this culture of risk taking that has TI attempting to partner with South Korea as a first mover in the digitization of learning for children K – 12. This digitation initiative is targeted for completion by 2015 (Peng, 2014). Social status surrounding a person’s education is critical within the South Korean culture ("Asia society," 2014). This emphasis on education highlights South Korea’s transformation over the last half century from a government of dictatorship into a democratic society that is enthusiastic about progress ("South korea’s education," 2013). This ability to transform has allowed South Korea to embrace these times of change facilitating adoption of new methods in order to improve one’s learning experience.
TI recognizes the opportunity to invest in South Korea’s educational structure. This investment will facilitate adoption of their systems. Being a first mover in this market can manifest into a network effect. By integrating their systems and software TI can ensure a steady form of cash flow from sale of hardware, licensing cost associated with software, and future upgrades. This analysis will evaluate South Korea as an emerging market and TI’s opportunity to become a foreign direct investor within the country. The assessment will conclude with an evaluation of three market forces affecting TI’s strategy in South Korea and determine if such a strategy would be viable in other emerging markets such as Mexico.
Foreign direct investment (FDI) represents an investment from a company into another country either through acquisition or expansion of operations (Peng, 2014). Some countries require this as a term for conducting business within said country. The primary advantage of such a strategy is it can reduce cost of distributing products within a country, provide risk mitigation opportunities in the form of dual sources and/or familiarize a company with cultural customs necessary to penetrate a target market. Understanding a target market’s culture is critical to tailoring offerings to meet expectations. A one size fits all approach to global strategy can result in a lack of acceptance in certain markets. An example of tailoring an offering to account for different markets is Coca Cola’s classic coke. Although the Coke...