StrategicManagement:TheCaseofSOEElectric

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Strategy in the Global Environment

SOE Electric and Machinery Co., Ltd is the successful private and Myanmar national

owned leading company in manufacturing, distribution and power transformers. This

company was established on 30th August 1993 and start from that day, this company is

emphasized only on the local market.

Because of the ASEAN Free Trade Area in 2015, most of the Myanmar is now trying

to take preparations for joining the emergence of AFTA. Therefore some companies start to

extend their market shares in international market. Among these companies, SOE Electric

and Machinery Co., Ltd is the one. Receiving Certificate of ISO 9001:2000 and ISO

9001:2008 for Quality Management System will also force SOE Electric to enter into the

international market for its electronic equipment. Therefore SOE Electric decided to export

the transformer to Vietnam. SOE Electric and Machinery Company will export 160 KVA

transformers and two 315 KVAs to Vietnam.

There are four basic strategies that can be used for the global expansion. However

among these strategies, SOE Electric decided to use the international strategy because this

product doesn’t required to get the high local responsiveness. Moreover for the location

economies, Myanmar is better than the Vietnam in the area such as operation cost, labor

cost and transportation cost etc. However because of the international strategy, they cannot

get the experience of the status of Vietnam market and Vietnam customers. This will be the

disadvantages for entering into the other countries. For the advantages, they can transfer

their distinctive competencies to foreign market.

Making a global expansion is so risky and costly. On the other hand, this is the first

exporting for SOE Electric. Therefore this can be said that SOE Electric enters into foreign

market by exporting mode. However SOE Electric makes an agreement with the local

Vietnam Company, HNK Group of Vietnam which is engaging in the heavy industries and

hotel services, to avoid the problems with local companies. In this agreement, both of these

companies are agreed to bilaterally exchange technologies between them and then

according to the agreement, two engineers of the company will be sent to Vietnam for

attending the training courses targeting with technicians of Vietnam.

From the exporting entry mode, SOE Electric will overcome the weakness of ability

to realize local market. Therefore SOE Electric will become to know about the status of

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StrategicManagement:TheCaseofSOEElectric

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local market although it will take more time than the other entry modes. From the

disadvantages point of view, the transportation cost will be higher than the other modes

because the assembly has done in Myanmar. Moreover because of the trade barriers, SOE

Electric will cost more and sometimes the agreement will be rejected because of the trading

law. And then the agreement is depend on the local company therefore SOE Electric will

need to make a good relationship with the local partner. However in this case, SOE Electric

doesn’t need to worry about this because of the agreement.

In conclusion, at the current moment SOE Electric is experiencing unprecedented

success in the local market. Most of the companies are doing exporting only in Myanmar

and this strategy, international strategy, is the most suitable strategy for Myanmar.

Therefore we assume that the international strategy which is used by SOE Electric is the

most suitable for them and start from this; they will get a chance to upgrade their strategy.

And then even this is only exporting, because of the agreement SOE Electric can get a

chance to get the technical experience as an advantage.

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