Entry into Foreign Market - Vrio Analysis

1. Determine which institutional and risk factors must be considered and whether they support entry or not.

Myanmar, once known as Burma, has embraced democracy. For decades Myanmar has been under a former military regime until Aung San Suu Kyi led the fight for democracy and won the 2012 election by a landslide. The questions many are asking is will the roots of democracy take hold? Since her election the world has been watching their developments unfold. I believe that Myanmar still has a long way to go and improve on some key institutional reforms before they are set on the path of modernization. The nation faces severe shortages in such basic infrastructure as electricity, roads and communications. Blackouts of several hours are a daily occurrence, so companies must invest in expensive and time consuming power-generating equipment. Other problems are the complicated foreign exchange system that allows for several exchange rates as well as a time-consuming and unclear government approval system.

On the first post-election business day, Myanmar attempted to revamp its financial system with the launch of a new foreign exchange regime. A new stock market, greater central bank independence and the introduction of tax holidays for foreign investors are among the government’s other recently announced reform plans (Mark Mobius).

2. Conduct a VRIO analysis to determine whether entry to Myanmar is supported.

VRIO Analysis is a good tool that helps us establish whether a resource is of competitive advantage or not.

V stands for valuable first question to ask if the resource is valuable? Myanmar has cheap but skilled labor force, they are developing rapidly. They have an abundance of natural resources and a sizable, although poor, population. Currently their skilled labor force is the most valuable asset, which China and Japan have been benefiting from. According to a study done in 2001 by the Japanese External Trade Organization, the average monthly wage for a Japanese plant worker in Myanmar was $68. That is one fifth cheaper than in China and is half cheaper then a worker in Vietnam.

R stands for rare. Rarity provides competitive advantage. Aircraft engine technology is example of rarity. Myanmar is rich with natural resources and potential. They have a skilled workforce, they are rich with natural resources including