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International Strategic Management

Name

Institution

Course

Lecturer

Date
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International Strategic Management

Political Factors

Factor Data Weighting London London Sydney Sydney

Source Multiplier Ranking / Score Ranking / Score
(5 = most Data X Data X
important Country Weighting Country Weighting ; Score out
Multiplier Score out Multiplier
1 = least of 2 of 2
important (2 = most (2 = most
) attractive) attractive)
Political E 2 2 2x5=102 2x5=10 risk (1-5)
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lowest risk
Corruption A 5 2 2x5=10 1 1x5=5
perception
(1-
180=most
corrupt
Civil D 3 2 2x3=6 1 1x3=3
unrest
(1-5)
lowest risk
Political 26 18
risk
factors
Subtotal
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Economic Factors

Technology Factors

Factor Data Weighting London London Sydney Sydney

Source Multiplier Ranking / Score Ranking / Score
(5 = most Data X Data X
important Country Weighting Country Weighting
; Score out Multiplier Score out Multiplier
1 = least of 2 of 2
important (2 = most (2 = most
) attractive) attractive)
Mobile 5 2 2x5=10 1x5=5
broadband
subscription
s
Innovation 3 2 2x5=10 1x5=5
orientation
Network 4 2 2x5=10 1x5=5
readiness
Technology 30 15
factors
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Factors London Sydney

Political factors 26 18
Economic Factors 40 25
Legal Factors 24 18
Technology Factors 30 15
Mobility Factors 24 16
Total 144 92
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Task 2

International expansion is an important strategic option which requires an

understanding of the macroeconomic factors which impact successful market entry. SEAT is

in search for a city that will enhance its market entry and facilitate faster market growth.

Based on macro environment data in task 1, the company should focus on the city of

London because of the advancements it has made in creating an accessible, integrated and

safe transport system.

London has a cutting edge of multimodal transport system which incorporates rail,

road, and cycling networks. It is a dynamic city responding to transportation pressures

through innovation and a clear vision. London is leading when it comes to changing travel

patterns. To summarize, the city has the capacity to accommodate a wide range of travel

demands.

Macroeconomic Analysis

The performance and resilience theme was weighted highly because of its relevance

to the operationalization of SEAT’s international strategy. London is a major global city

which struggles with traffic congestion (Le Vine & Polak, 2019). In this context, traffic

congestion favors the success of the Minimo. London’s high score on modal diversity

indicates that the city has a system which would support the use of the quadricycle.

London has an advanced traffic management system which will increase the

attractiveness of a ride-sharing model. In particular, the Surface Intelligent Transport System

(SITS) which has predictive capabilities, and the ability to capture traffic information in real

time, makes the city an attractive place for passenger-based transport business. In addition,

the city scores highly on integrated mobility which will help to support ride sharing. London

also scores highly on transport safety which is a critical aspect of investing in an industry.

Transport safety has a direct impact on the cost of doing business. In a city with relatively
fewer road accidents, people will feel safer riding in the 2-passenger quadricycle.
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Conclusively, safety will ensure the utilization of the mobility service.

Vision and leadership strategy were weighted highly because of the city’s focus on

improving the public transport system. London’s leadership has been encouraging the use of

means which reduce the carbon footprint (Deloitte, 2019). In the future, the local

government aims to restrict public transport vehicles with high emissions from the centre of

the city.

Therefore, there are important opportunities created by policies and the strategic vision.

The introduction of the Minimo is aligned with the vision of the city. Since it is

equipped with an electric power train, the Minimo produces zero emissions and will

contribute to London’s efforts to replace the combustion engine. Without a doubt, London’s

mayor is committed to driving sustainable action on climate change (Le Vine & Polak, 2019).

The company will benefit from the incentives provided by the city for transporters who

meet the ideal emissions standards.

The service and inclusion factor were weighted highly because they relevance to the

decision to enter the London market. To begin with, London does not score well on the

affordability scale, as it is aspiring to provide affordable services (Mattioli, Lucas, & Marsden,

2017). The quadricycle is going to fill an important gap in the market because there are

many Londoners looking for affordable transport. On the other hand, the city is a top

performer when it comes to accessibility because there are user-friendly ways to access the

various modes of transport. As such, the company will find it easy to access customers in the

various boroughs. Besides, there is a wide public transport network coverage which

increases the target market for the company.

Although the private car is the most popular travel model, an increasing number of

Londoners prefer not own a car because of the costs involved including the exorbitant

parking fee and congestion charges. Apart from costs, environmental concerns also motivate
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Londoners to prefer ride-sharing over car ownership (Kamargianni, Matyas, Li, & Muscat,

2018). Changing trends in attitudes towards car ownership create sustainable businesses

opportunities for SEAT which seeks to provide a sustainable and cost-effective service.

London was ideal because it has a forward-thinking government with policies

focusing on the reduction of car use. The existing policy framework encourages Londoners

to test alternatives such as electric cars or ride-sharing (Kamargianni et al., 2018). Therefore,

it would be easier for the company to get traction in the city because there is a ready

customer base willing to try electric cars.

Political Factors

It is important to consider the political factors which market London a suitable

market for SEAT. The city of London is the capital of a politically stable democratic country.

The political risk of investing in Britain is low because it is politically stable with institutions

that work. London’s leadership has a high future orientation which favors investments in

transport innovation. The Deloitte mobility index clearly indicates that London is leading in

future orientation. As a city that has embraced modal diversity, London has created

opportunities for Seat to expand and grow through a ride-sharing. The company can benefit

from the city’s changing travel trends driven by investments in infrastructure and supportive

policies by the local government.

In 2019, the United Kingdom was the 12th most corrupt country, according to the

corruption perception index. Without a doubt, corruption has a major impact on

profitability. Operating in London will require licensing and taxation by the local

government. Low levels of corruption reduce the risk of paying bribes to local officials.

Corruption can affect the company because it creates unfair competition, especially if

competitors get favors from a regulator which translate to business advantages.

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Economic Factors

The macro environment factors have a significant impact on the aggregate demand

in an economy. London is the capital of the 6th largest economy in the world and the 2nd

largest in Europe. The U.K.s GDP (gross domestic product) was 2.855 trillion USD in 2018.

The country has one of the highest GDPs in the world. Investing in London will enable the

company to access a mature developed market which will generate profits sustainably.

London is a global financial centre with a variety of support services. Clearly,

investing in London would provide the company with access to capital for investment and

expansion. The availability of financial services is important because it provides the company

with access to affordable financing for a wide range of business activities. In brief, it will

improve the ability of the company to take exploit emerging opportunities in the market.

With a population of 8.9 million people, London is an attractive market for the

company. The size of the population has a direct impact on the size of the target market.

Over 5.5 million are either employed or economically active. Therefore, the large population

represents a viable market with a significant growth potential. In addition, a large market

reduces competition because there is a larger market share. Incumbent transport providers

such as Uber cannot satisfy the market.

Before it was interrupted by the COVID-19 global pandemic, the U.K. experienced

positive economic growth for five years. Positive growth, at an average of 1.3% in the last 10

years, is an important indicator of a healthy market. Although Brexit has created economic

uncertainty, the economy is expected to recover in the next few years. Besides, Brexit has

provided the U.K. government with the opportunity to respond to economic challenges

away from the European Union. Generally, SEAT will be influenced by the overall economic

performance.
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Legal Factors
According to the World Bank Ease of Doing Business index the U.K. is ranked 8 th in

the world. The U.K. is one of the best places to do business because the government

prioritizes foreign direct investment as a driver of economic performance (World Bank Ease

of Doing Business Index 2019). For instance, it takes an average of 4 days to start a business.

Contract disputes can be solved within 437 days or 16 months, and it takes 21 days to

register a property.

Ease of doing business is a critical factor because it directly affects the time, cost and

effort it takes to set up a business in the U.K. The company is likely to get into commercial

disputes which will have financial implications. Certainly, the ability of U.K. courts to

speedily and fairly enforce contracts or to settle legal disputes is important. The quality of

judicial processes in the U.K. helps to promote certainty.

The U.K. established an independent judiciary in the early 18th century. The executive

dies not interfere with judicial processes (Delaney, 2016). Since the judiciary is independent,

litigants are likely to get justice. Besides, the independent judiciary is the bedrock of rule of

law. The company will operate in an environment where the rule of law governs commercial

dealings.

The U.K. is a free market economy which accepts foreign ownership of Businesses. As

a Spanish company, SEAT should be concerned about the treatment of foreign ownership in

the U.K. where an estimated 1.1% of businesses are foreign-owned (Qamar, Gardner,

Buckley, & Zhao, 2019). The U.K. has no restrictions on ownership of businesses in the

transport sector. Therefore, the company can enter the market with the ownership

structure which it desires. From a strategic perspective, full ownership of a business

provides the company with complete control over strategies and operations.
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Metropolitan Economic Factors

In London, there are 1510 inhabitants per square kilometers. The spatial

concentration and distribution of people in an urban environment determines transport

requirements. The success of a ride-sharing model is dependent on a dense urban

population. Ass a high-density metropolis, London is attractive because it will help the

company to enter the market using a business model that is based on ride-sharing. In such a

city, ride-sharing is attractive because it reduces the number of cars on the road. In addition,

a high-density increases the demand for transport services. It also creates the demand for

alternative transport services.

Apart from contributing a third of the U.K.s GDP, the London is the most important

economic hub in Europe. The fact that London is an economic hub makes an attractive city

for SEAT. The long-term growth of the company will be impacted by the high level of

economic activity, including spending by consumers contributes to economic growth.

London has a healthy economy that supports the growth and expansion of the transport

sector.

Technology Factors

Technology factors have an increasing impact on travel and mobility. Real-time traffic

information is playing an important role in reducing congestion. London has one of the

highest broadband connectivity rates in the world (Masson, Berbineau, & Lefebvre, 2015).

Also, mobile applications and smartphones are connecting users to service providers. The

shift to a 5G network and the high level of connectivity make the city attractive because it

will make it easier for the company to connect with customers.

SEAT will thrive in London because the city has invested heavily technologies. London

has an intelligent transport system that will make it easier for the company to operate a

non-traditional model (Liebig, Piatkowski, Bockermann, & Morik, 2017). Without a doubt,

the success of a ride-sharing model is fundamentally reliant on technology. Remember

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buyers are always on the look-out for affordable transport services. The Minimo has the

potential to push the competitiveness of the ride-sharing model further by providing an

affordable service that will be popular on the internet. The main drawback is that SEAT will

not be first-mover in the London transport market. Companies such as Uber and Ola are

already competing in the market. A company such as Uber has deployed the technologies

on a global scale and could have an advantage that SEAT will have to overcome.

Conclusion

SEAT should consider London to be an optimal city for expansion because its

macroenvironment supports alternative mobility. To begin with, mobility factors such as

road safety and integrated and shared mobility, vision and strategy, regulatory environment,

environmental sustainability, affordability and public transit coverage we rated as important

factors that would impact the attractiveness of the abandon market. London encourages the

use of alternative modes of transport, especially ones which reduce the city’s carbon

footprint. The city is proactively moving towards environmental sustainability. Therefore, its

regulatory environment favors SEAT because it has an electric car. The company will have

fewer barriers to overcome in London, a thriving metropolis with a large population of 8.9

million. The city has a high level of accessibility which ensures that residents can use the

mode of transport of their choice.

References

Delaney, E. (2016). Searching for constitutional meaning in institutional design: The debate

over judicial appointments in the United Kingdom. International Journal of

Constitutional Law, 14(3), 752-768.

Kamargianni, M., Matyas, M., Li, W., & Muscat, J. (2018). Londoners’ attitudes towards

carownership and Mobility-as-a-Service: Impact assessment and opportunities that

lie ahead.
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Le Vine, S., & Polak, J. (2019). The impact of free-floating carsharing on car ownership:

Early-stage findings from London. Transport Policy, 75, 119-127.

Liebig, T., Piatkowski, N., Bockermann, C., & Morik, K. (2017). Dynamic route planning with

real-time traffic predictions. Information Systems, 64, 258-265.

Mattioli, G., Lucas, K., & Marsden, G. (2017). Transport poverty and fuel poverty in the UK:

From analogy to comparison. Transport Policy, 59, 93-105.

Masson, É., Berbineau, M., & Lefebvre, S. (2015). Broadband Internet access on board high

speed trains, A technological survey. In International Workshop on Communication

Technologies for Vehicles (pp. 165-176). Cham: Springer.

Qamar, A., Gardner, E. C., Buckley, T., & Zhao, K. (2019). Home-owned versus foreignowned

firms in the UK automotive industry: Exploring the microfoundations of

ambidextrous production and supply chain positioning. International Business

Review, 101657.
Table Sources

A. Corruption perception index. Transparency International

B. Deloitte Mobility Index

C. Ease of Doing Business Index

D. Global Peace Index

E. OECD Metropolitan Area Statistics

F. World Economic Forum Global Competitiveness Report,

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