BusYou’s Proposed International Expansion

CASE ANALYSIS – You must answer this question (20 marks)
BusYou’s proposed international expansion
BusYou is an Australian IT services firm, which provides tailored ticketing, tracking, and compliance IT solutions to regional and urban public transport services across Australia. During its 10-year history, the company has become a leading firm in the Australian market for public transport operation solutions with a 30% market share, including contracts for several major statewide public transport systems across Australia. BusYou’s team is international, with the core team based in Australia, and a substantial portion of IT programming being outsourced to an IT company in Bada, a country in Southeast Asia. Currently, BusYou’s operations has been focused exclusively on serving the Australian market. BusYou has started to explore potential options for internationalising its operations. Initial country scanning has identified two potential countries of interest, one in Europe and one in Asia
While BusYou has been outsourcing to the IT company in Bada for 5 years, it has not been engaged in the public transportation market in Bada. This developing Southeast Asian nation of 120 million people has high levels of literacy and educational attainment, but English is not yet widely spoken. A member of ASEAN, Bada has a GDP per capita in the lower half of the group but has enjoyed rapid GDP growth of around 8% per year over the past 20 years due to its highly open economy. The higher average income has led the state to invest in urban infrastructure to address the traffic gridlocks that are hampering commuter transport as well as freight transport from factories to ports. However, Bada’s government places less emphasis on improving its rural transportation network and transport connections with other ASEAN countries. Its state-led public transport system is inefficient and still reliant on paper ticketing, resulting in low levels of patronage. Bada’s government recently started to outsource the operation of its state-owned urban public transportation network to private operators. The currency, the bappy, is stable, being pegged to the US dollar. Its IT infrastructure is still relatively underdeveloped, with international investors raising concerns about data privacy and security.
The second country of interest to BusYou is Kislev. Located in Western Europe, this landlocked, European Union member country has a population of 10 million people. It is at the intersection of major EU transportation routes, and its public transport system provides frequent, well used, and highly reliable services domestically and to continental European destinations. Kislev boasts high levels of human capital, with most of the population speaking some English. This democratic country is open to foreign investment and has favourable IT regulations in line with European Union expectations, its GDP per capita is amongst the highest in Europe. The mature public transport system has resulted in a highly competitive market with several major European firms actively competing for operational contracts in Kislev’s market. The country still retains its own currency, the kippy, which is has been appreciating against the Australian dollar. The Kislevite government has signalled its strong commitment to the European Union’s efforts to create a unified Trans-European Transport Network across continental Europe.
1. From the information provided and your knowledge of international business concepts, analyse the opportunities and risks in each country’s business environment and their potential implications for BusYou. (10 marks)
2. Given your analysis above, evaluate BusYou’s entry mode options if the company decides to enter either Bada or Kislev. Which country would you recommend the company to enter during the next 12 months and why? (10 marks)