Professional Documents
Culture Documents
Team- 2
Term Paper
Term Paper
Rocket Internet
Submitted by:
Team- 2
Jawad Mostafa Rashid- 12104094
Ishtiaq Ahmed- 12104011
Nabila Yasmin- 12104215
MridhaFaysalHossain 12104048
Submitted to:
Nusrat Hafiz
Lecturer, BBS, BRAC University
Prepared for:
Course: International Business (BUS301)
BRAC Business School, BRAC University
Submission Date:
26 November, 2014
Letter of Transmittal
November 26, 2014
Ms. Nusrat Hafiz
Lecturer
BRAC Business School
BRAC University.
Subject: Letter for submission of term paper
Dear Madam,
We have analyzed the different business strategies and other components of Rocket
Internet as a MNC.
We have discussed here the entry mode, value creation, core competency and
analyzed
them.
This
report
helps
us
to
understand
and
learn
various
Sincerely,
Jawad Mostafa Rashid 12104094
Ishtiaq Ahmed 12104011
Nabila Yasmin12104215
MridhaFaysalHossain 12104048
Sayeed Ahamede Shimul 09204074
Acknowledgement
We, Team-2, the students of International Business (BUS301) would like to take the
opportunity to thank them who helped us at the time of preparing this report. We
are very grateful to our course instructor Ms. Nusrat Hafiz for her continuous
guidance hence forth. Her guidance has been of extreme help to us. In addition to
this, his requirements for the assignment made it mandatory for us to create
something, which proved to be very rewarding.
We would like to thank BRAC University for the working environment of the lab;
where we spent hours together to prepare this report. We are really indebt to all
the people who helped us in preparing this report.
Finally, all the group members related to this term paper worked really hard to
make this report a success. Without everyones active participation it would be very
difficult for us to complete this task in time.
Executive summery
Brocket Internet is one of the largest Online market place all over the world. Rocket
Internet is now operating Carmudi, Lamudi, Foodpanda, Kyamu. Rocket Internet
has made shopping easy for the customers because they can shop from their
house. As it is an online based shop and a MNC, they are following different
international business strategies. They are following Transnational business theory.
They have low pressure of local responsiveness and high pressure of cost reduction.
three sectors like- ecommerce, marketplace and financial technology. Rocket
Internet is now the leading online market place of the world.
Table of Content
Topics
Page
Background
Objective
Scope
Methodology
Limitations
Company Overview
Literature Review
Analysis
27
Recommendation
28
Conclusion
29
Reference
30
Background
This is a detailed report on Rocket Internet. Its main aim is to give an overview of
how Rocket Internet conducts business in Bangladesh. Their marketing strategies
5
Objective
The specific objectives of the report are as follows:
Identify the International Business Strategy
Identify the consumers using Rocket Internet
Provide related recommendations
Scope
This report deals with Rocket Internets business strategies. This report will give us
the brief idea about how this company operates business in case of their strategies.
We have analyzed different scenarios.
Methodology
While preparing this report information was gathered from the following source:
Secondary data: Internet resources.
Limitations
The main limitation is the availability of information in the website is very low. It is
also difficult to identify the business strategies of any business. Without being the
employee of the company it is not possible to know the inside information of the
company or business strategies. So, it was the biggest limitations for us.
Company Overview
Rocket Internet is one of the world's largest e-commerce focused venture capital
firms and startup incubators founded in 2007 by the Samwer brothers. The
founders
gained
visibility
through
successful
investments
in Groupon, eBay, Facebook, Linkedin, Zynga, etc. (either through early direct
investment or through taken over target companies). The company's business
model is to identify successful internet ventures from other countries (mostly the
United States) and replicate them in predominantly emerging markets. In 2013,
Rocket
Internet raisedclose
to
$2
billion
from investors
including
Russian
billionaire Leonard Blavatnik, Swedish investment firm Kinnevik, and J.P. Morgan.
This is in addition to nearly $2 billion that Rocket raised in 2012. The firm, tightly
controlled by its founders, is known for its aggressive approach in managing its
invested ventures, often referred to as blitzkrieg. It prides itself for the speed of
execution and ability to hire exceptional talent.
Rocket Internet operates in more than 50 countries and has more than 75 ventures
in their portfolio such as the e-commerce retail companies Jabong.com in India,
Lamoda.ru in Russia, ZALORA in South East Asia, The Iconic and Zanui in Australia,
the global food delivery platform foodpanda/hellofood, the global property listings
site Lamudi as well as Lamudi.pk, Carmudi, Kaymu.pk, easytaxi.com.pk, Jumia in
Africa, Azmalo.pk and Daraz.pk in Pakistan. Rocket Internets various companies
created more than 20.000 jobs worldwide.
The Rocket Internet Company is focusing in the three sectors like- ecommerce,
marketplace and financial technology. Their target regions are Europe, Latin
America, Russia & CIS, Africa & Middle East, and Asia Pacific. They are not targeting
US and China because those countries already have this kind of business system.
7
The worlds population 75% people lives outside the US and China and Rocket
Internet Company are trying to grip those populations to run their business
properly. For example: Jobong and Foodpanda they are doing business in India and
those companies are doing good over there. Foodpanda recently have come to
Bangladesh and here they are doing well.
Mission:
Our mission is to become the worlds largest internet platform outside the United
States and China.
Vision:
We indentify and build proven Internet business models and transfer them to new,
underserved or untapped markets, where we seek to scale them into market
leading online companies. Started in 2007 Rocket Internet employs more than
25,000 people across our network of companies, which operates in more than 100
countries on five continents.
Goal:
At Rocket, we believe the Internet is going further and faster into daily life than
anyone imagined. Our goal is to capture the largest possible share of consumer
online spending in our markets.
Literature Review
Basic Entry Decisions
8
There are three basic decisions that a firm should consider while thinking of foreign
expansion: which markets to enter, when to enter those markets, and on what
scale.
i)
You'll find in excess of one hundred sixty nation-states on the globe, nevertheless
they do not hold the exact profit potential for a strong considering international
growth. In the long run, the selection has to be dependent on a good analysis of a
state's long-run profit potential. It is a function of various factors. The economic
and political factors which affect this potential attractiveness of an international
market place. A great international business is determined by the balance of the
benefits, expenditures, and risks regarding conducting business in that particular
territory.
Doing business in a nation is a function of factors like the size of the market, the
purchasing power of the consumers in that particular market, and their probable
future wealth. These factors are the determinants of long-run economic benefits.
The costs and risks associated with doing business in outside nation are usually
lower in financially developed and politically steady democratic countries, and they
are more prominent in less financially developed and politically unsteady countries.
An international business can create a greater value in a foreign market which
depends on the product offering to that particular market and the nature of local
competition. If they can offer a product or service which is not vastly available in
the local market and if it satisfies the consumers need, the value will automatically
increase. Greater value enables to charge higher prices or to increase sales volume
rapidly.
Based on the factors that have been discussed above, Rocket Internet came to
Bangladesh and they had started their international chain in this country.
Bangladesh has a large level of population, it is politically stable and use of
technology is higher. As Rocket Internet provides services through internet,
Bangladesh is a right choice for them. People of Bangladesh have been purchasing
9
things from internet and receiving it through home delivery. The purchasing power
of the consumers is not like advanced countries but people can afford it. Basically,
the demand of e-commerce in Bangladesh is pretty much higher.
ii)
Timing of Entry
buying
things
from
their
ventures
like
kaymu.com.bd,
foodpanda.com,
carmudi.com, lamudi.com.
iii)
This is the final issue to consider when entering to an international market. Entering
a foreign market on a large scale base involves the commitment of significant
resources. Not all the firms have the necessary resources to enter largely. Many
large firms prefer to enter foreign markets on a small scale base and later on they
build slowly as they adapt to the local conditions.
The aftermaths of entering on a significant scale are connected with the value of
the resulting strategic commitments. It is a decision that has a long-term impact
and is difficult to change. Deciding to enter a foreign market on a significant scale is
a major strategic commitment. Strategic commitments like large-scale market entry
may have an important influence on the nature of competition in a market.
Significant strategic commitments are neither good nor bad. They tend to change
the competitive playing field and release a number of changes. These changes will
be both desirable and undesirable. Firms have to act accordingly. Rocket Internet
entered Bangladeshi market slowly. They have running only 5 ventures in
Bangladesh. hellofresh.com, paymill.com and many more ventures are not
introduced in Bangladeshi market. They are observing the local market and based
on the demand they are opening different sections of business.
Entry Modes
There are six modes to enter an international market 1.
Exporting
2.
Turnkey Projects
11
3.
Licensing
4.
Franchising
5.
Joint Ventures
6.
12
brand value and large investments and also proper marketing strategies. People
have started to believe that Rocket Internet is better than other competitors in
Bangladesh. People are getting their products at the similar price but Rocket
Internet is gainer because they have got other competitors customers as well. So
low pricing is not going to be trouble. Besides, their production cost is also lower
because of their efficient working unit.
Strategic Positioning
Porters note that it is important for a firm to be explicit about its choice of strategic
emphasis with regard to value creation and low cost, and to configure its internal
operations to support that strategic emphasis. The efficiency frontier shows all of
the different positions that a firm can adopt with regard to adding value to the
product (V) and low cost (C). Rocket Internet has the highest value than the
13
spends a lot in their marketing and sales. Fan followers of their social media pages
are 10 times higher than its competitors. These things enabled them to create a
higher value. They have their own customer service to support its consumers. They
provide telemarketing, home delivery etc. All these materials help them to operate
the business effectively and efficiently.
As Rocket Internet is an online based business unlike most of the product oriented
businesses it does not need to have Location economies and export economies. But
it uses the other core competencies.
Core Competencies
Learning Effects:
Rocket Internet is using the learning effects for the training of its high level
employees. These high level employees are going to different entrprizes of Rocket
15
Inter in all over the world and learning the facts and operations of business and
other things related to their business.
17
Rocket Internet offers online food, car, shoes, fashion and beauty, household,
furniture, electronic equipment, real estate selling at doorstep.
This company is doing business in many countries but their products or types of
business are same everywhere. Their products are standardized but they do
business in different names in different names around the globe. They are following
the Transnational Strategy. This type of strategy indicates that pressure of cost
reduction is high and as well as it is less responsive to locality. They are using the
same software for online selling but using different names in different regions. They
have low cost products in Bangladesh so that the people here can afford. Many
products are from China so that it can be affordable. So, it has a mixed approach to
locally responsiveness. Another attribute of transnational strategy is tend to raise
profitability and profit growth by value creations-by simultaneously achieving low
costs & differentiate product offerings. This companytries to reach people at low
cost. As it is an online market place, so it consumers do not need to go to the shop
and it is saving the cost of the consumers. As it is an online shop, it does not need
a physical shop and also does not need to employ a huge amount of people to look
after the shop and sell physically. So, here also the cost goes down. The main
reason the Kyamu, Lamudi, Carmudi need to keep in mind that their competitors
are building stronger day by day.They have the pressure to keep the price low as
there are other online shops like Bikroy.com, Ekhanei, OLX.com and some new
entrants like: Priyoshop, Bajimat, iferry.com etc. and if they sell in a lower price,
the customers will move to them . It is is a huge challenge for Kaymu (Rocket
Internet). So, the company is becoming successful in cost reduction as there is a
pressure of cost reduction. And low cost helps to get maximum market share.
Level of integration
Free Trade Area:
In the industrialized state you will find commonly couple of if almost any significant
barriers to the effortless swap associated with items along with providers involving
18
parts of which state. For example, you will find commonly not any deal tariffs or
perhaps importance quotas; you will find commonly not any delays seeing that
items complete derived from one of part of the state to a new (other than people
who long distance imposes); you will find commonly not any differences associated
with taxation along with legislations. Between places, alternatively, several barriers
to the effortless swap associated with items generally complete take place. It is
very common with regard to generally there being importance responsibilities of
one type or perhaps yet another (as items key in any country) and the amounts of
income place a burden on along with legislations generally range by means of state.
The aim of a free deal spot is usually to thus decrease barriers to be able to
effortless swap of which deal can certainly mature due to specialization, scale
associated with your time, and many significantly by way of (the idea along with
practice of) comparative edge. The theory associated with comparative edge argues
of which in a indefinite current market (in equilibrium) every way to obtain
manufacturing may are likely to are dedicated to of which pastime wherever they
have comparative (rather than absolute) edge. The theory argues that the world
wide web effect will probably be a rise throughout revenue along with ultimately
money along with well-being for all within the totally free deal spot. Nevertheless
the idea alludes simply to blend money along with states almost nothing about the
supply associated with money; actually there might be significant losers, in
particular among the not too long ago safeguarded companies with a comparative
disadvantage. In theory, the general benefits via deal may be used to recompense
to the outcomes associated with diminished deal barriers by means of ideal interparty exchanges.
Customs union:
In the industrialized nation you will find commonly handful of if any major barriers
on the quick alternate involving items and also solutions involving elements of that
will nation. As an example, you will find commonly absolutely no industry contract
deals or maybe transfer quotas; you will find commonly absolutely no delays seeing
19
that items pass collected from one of the main nation completely to another (other
than the ones that long distance imposes); you will find commonly absolutely no
distinctions involving taxation and also regulation. Between international locations,
however, several of these barriers on the quick alternate involving items often carry
out take place. It truly is prevalent with regard to at this time there to become
transfer jobs of 1 form or maybe another (as items get into any country) plus the
levels of income levy and also regulation often vary by nation.
The use of a complimentary industry place is usually to consequently reduce
barriers to quick alternate that will industry could expand as a result of
specialization, scale involving labor, and a lot significantly through (the principle and
also training of) evaluation edge. The idea involving evaluation edge argues that
will in a endless market (in equilibrium) each and every supply of generation may
have a tendency to focus on that will pastime in which they have evaluation (rather
than absolute) edge. The idea argues that this net consequence is going to be a
boost with profits and also eventually success and also well-being for you in the
free of charge industry place. However principle refers just to aggregate success
and also says practically nothing in regards to the submitting involving success; in
reality there could be major losers, specifically one of the recently protected sectors
with an evaluation downside. Inside principle, the general benefits through industry
might be accustomed to recompense for that side effects involving lessened
industry barriers by suitable inter-party Geneva Chamonix transfers.
Common market:
Common market sector speaks to a significant step towards huge financial
reconciliation. Notwithstanding containing the procurements of a traditions union, a
typical business (CM) evacuates all boundaries to the versatility of individuals,
capital and different assets inside the region being referred to, and in addition
disposing of non-tariff hindrances to exchange, for example, the administrative
treatment of item benchmarks.
Creating a typical market ordinarily requires critical arrangement harmonization in
various zones. Free development of work, for instance, requires concurrence on
20
comparison downside. Throughout principle, the entire gains by trade may very well
be used to pay for that side effects associated with lowered trade limitations by
simply ideal inter-party coach transfers.
Political Union:
Within the industrialized land you will discover typically number of in case any
major obstacles to the quick alternate associated with items as well as providers
involving aspects of which land. As an example, you will discover typically
absolutely no buy and sell data plans or importance quotas; you will discover
typically absolutely no delays seeing that items move from section of the land to a
new (other when compared with the ones that length imposes); you will discover
typically absolutely no differences associated with taxation as well as regulations. In
between countries, on the other hand, several of these obstacles to the quick
alternate associated with items generally accomplish take place. It's prevalent
regarding right now there to be importance tasks of just one kind or another (as
items key in a country) along with the degrees of sales place a burden on as well as
regulations generally range by means of land.
The use of a free buy and sell area is usually to so lessen obstacles for you to quick
alternate of which buy and sell may develop because of specialization, department
associated with your time, and quite a few notably by way of (the idea as well as
practice of) marketplace analysis gain. The idea associated with marketplace
analysis gain argues of which in the unrestricted market (in equilibrium) each and
every source of production will certainly are likely to specialize in of which action in
which it's got marketplace analysis (rather when compared with absolute) gain. The
idea argues how the web end result will probably be a rise in revenue as well as
ultimately success as well as well-being for anyone in the free of charge buy and
sell area. However the idea relates only to get worse success as well as states that
nothing at all around the syndication associated with success; in reality there can
be major losers, in particular among the just lately guarded sectors having a
marketplace analysis drawback. With process, the overall gains through buy and
22
sell might be accustomed to pay to the outcomes associated with lessened buy and
sell obstacles by means of correct inter-party transfers.
Global expansion, profitability and profit growth
Numerous organizations, essentially, carry on like unmindful vintners. Development
activities are frequently over stimulated with cash and authority consideration. The
result is loads of movement and an expansive number of development tasks, and
this action frequently does not correspond with results. Amount does not mean
quality. To enhance the nature of development, business pioneers need to curtail
negligible items, brands, and markets so they have a superior possibility of winning
in
their
picked
ranges
of
centering.
Our observation suggests that growth through focus requires the organization to
progress systematically through a set of seven steps: discovery, strategy, vision,
people, execution, organization, and metrics. Taken together, they represent a
powerful formula for driving profitable growth.
made
certain
which
collective
knowledge
has
been
accumulated
objectively. This work spaces devoted to what worked well in lieu of on what failed
to work, since it is very simple to make on what working is compared to correct
what isnt working. To be sure a client target, work spaces included intensive
23
24
the persons liable for benefits develop the working freedom they require.
Rocket Internet found that the provider received turn out to be this kind of intricate
matrix which liability was fragmented throughout operates, areas, along with
sections, yet conclusion creating received turn out to be hugely centralized. Options
for example product charges had been currently being manufactured with
management and business secret headquarters that got for a longer time along
with ruled out the particular prosperous knowledge along with wording associated
with local areas. Even this sort of regimen decisions since the charges associated
with coffee throughout Philippines had been manufactured for the management and
business secret headquarters throughout Philippines. It was altered to offer
company commanders the particular liberty to produce decisions that may allow
them to help compete efficiently into their areas.
6. Organization: Build Collaborative Networks
Growth initiatives rarely fit within organizational silos of function, geography, and
business unit. Rather, they need to be managed by creating communities and
networks across the company, formal as well as informal. At Rocket internet,
certain networks, such as R&D, have always been strong. However, as business
units were pushed to take P&L responsibility, it was important to set up
collaborative networks to ensure that the best people with the best ideas were
connected to leverage expertise and scale. Rocket Internet set up global category
teams consisting of executives drawn from different functions and geographies to
manage global brands, innovation, and supply chains across markets. Each team
follows the approach that works best for its brand or category in terms of what
needs to be done by whom, globally or locally.
Analysis
After doing the term paper we have found out that, Rocket Internet is following the
Green field strategy. Rocket Internet entered the Bangladeshi market after
inception of few Bangladeshi companies like akhoni.com, cellbazar.com etc. They
26
observed their business strategies and entered the market with a complete
strategy. They are not the first timer in Bangladesh. They have done their proper
research, have planned a strategy and then they have entered in the Bangladeshi
market with their ventures. They have set up 5 ventures in Bangladesh so far.
Greenfield investment enables a firm to control centrally. Few of them arekaymu.com.bd, foodpanda.com, carmudi.com, lamudi.com. Though Green Field is a
very costly process but still they have gone for this because they have numerous
investors. They didnt do any joint venture, exporting, licensing or any other
strategy. Because of their generous amount of investors they have gone for Green
field. Life has become very busy now. people want to save time and now doing
shopping online has become a new trend. People look for different online sites
where they can easily do their shopping. Rocket Internet has created a good Brand
image in Bangladesh. Though people used do online shopping from other online
shops but now people have gone for different Rocket Internet ventures.
Rocket Internet set up global category consists of executives drawn from different
functions and geographies to manage global brands, innovation and supply chains
across markets. Each team follows the approach that works best for its brand or
category in terms of what needs to be done.
Rocket Internet is the first internet MNC that came to Bangladesh. Timing of entry
of a company is very important. The companies who come first in a new market
always have benefits. It is easy for them to create a good brand image. Though
there are though there are other online shops in Bangladesh but none of them are
MNC and Rocket Internet is the first MNC in this sector in Bangladesh. The strategy
they are following is lost cost product and Bangladeshi people are very happy with
this strategy.
It is very important to scale the entry mode in a foreign market. Rocket Internet is
entering in the market very slowly. As we know that they have more than 20
ventures but they have opened only 5 ventures in Bangladesh. Rocket internet has
created a very good brand image in Bangladesh. People are shifting towards them
and buying products from their venture. From this we can easily say that Rocket
27
Internet has chosen a good strategy and created almost a permanent place in
peoples mind.
Rocket Internet uses different types of learning effects to train their employees.
They want the best employees for their customers so that the customers do not
have to suffer for their service. Their managers have skills by which they find out
the potential best helping hand.
Recommendations
They should focus on quality of the product rather than the low price of the
product. Low cost product does not always attract consumers. Customers
also want good quality product. And if they get good quality product at a little
high price then they will definitely grab the most market share.
They should be more responsive to the locality.
They can introduce their website in Bangladesh. Though they have a website
but it is not in Bangladesh. There Bangladeshi website will attract more
Bangladeshi consumers.
They need to offer in the market. The things they are offering right now are
only those which are also offered by other companies.
They also need to do some social things. It is proved that consumers go for
those companies which do CSR which means corporate social responsibilities.
So Rocket Internet needs to perform their responsibilities towards the society
too.
Conclusion
Rocket Internet is one of the world's largest e-commerce focused venture capital
firms and startup incubators founded in 2007 by the Samwer brothers. Their
mission is to become the worlds largest internet platform outside the United States
28
and China. They indentify and build proven Internet business models and transfer
them to new, underserved or untapped markets, where they seek to scale them
into market leading online companies. They are following the transnational strategy
and their main target is to sell products at a low price. They compete with other
online shops and to stay compete with the market they follow this strategy. Their
ventures which are working n Bangladesh are Kaymu, Food Panda etc. They are
doing this online business almost all over the Bangladesh. The company is
becoming successful in cost reduction process and according to them low cost helps
to get maximum market share.
Bibliography
29
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30