INTRODUCTION
This paper presents a study that explored the strategies and barriers of software market entry in China. The study focused on two veteran companies in the software industry – Microsoft and SAP. Their current and previous marketing strategies for conquering the giant software industry of China will be explored, as well as the barriers on the entry. The study will explore the two marketing strategies of the two companies through the popular 4ps marketing theory – product, place, price and promotion.
The research approach for this project was the case study approach. The aim of the study was to be able to compare the marketing strategies of Microsoft and SAP and from there, compare the pros and cons of their strategy, conclude which strategies are best for China, and develop recommendations as a response to the results.
The reason why this topic was chosen was to be able to pinpoint and identify the different market entry strategies used by software companies to be able to penetrate the software market of greater China. The problem being seen here is that software piracy is highly prevalent in the country, which could be a strong barrier for both Microsoft and SAP. Another concern is the trade laws in China and trade barriers. Those and other issues will be looked at in the study. In the meantime, this study will present the aims, objective, problems, and methodology of the study.
BACKGROUND
China’s Economy
Economically, China was able to emerged successfully despite the tumultuous nature of the 20th century by becoming increasingly prosperous and confident (Datamonitor, 2004).
As mentioned, following the regular introduction of market-style reforms from the late 1970s onwards, two and a half decades of rapid economic growth have lifted millions out of poverty and seen China climb the global economic league table. With its accession to the WTO in late 2001, China’s integration into the global economy has accelerated (Datamonitor, 2004).
The rapid pace of change has not been without its costs. A growing economic gap has opened up between the prosperous coastal regions of the east and the poverty stricken western hinterland. Even within the more prosperous regions, economic inequality is becoming more pronounced. Unemployment is also rising, and is set to increase further as the economy adjusts to increased openness to trade (Datamonitor, 2004).
On the global scene, China’s increased self-confidence is presenting challenges (Datamonitor, 2004). The two reasons why China is attractive to multi-nationals are: substantial size and high growth rate of its consumer market (Cui and Liu, 2001). In addition, at the macro-economic level, China’s GDP reached 4 billion in 1998, making the sixth largest economy in the world (US-China Business Council, 1999). The retail market of China grew from 0 billion in 1996 to 1 billion in 1998 and increasing until now (Cui and Liu, 2001).
China also boasts a strong business environment. China joined the World Trade Organisation (WTO) in December 2001, and has been making steady progress in meeting its WTO commitments. Furthermore, with its seemingly limitless supply of cheap labour, th1e country remains the top destination for foreign direct investment (FDI) in the developing world (Datamonitor, 2004).
Packaged Software Market in China
China’s packaged software market reached US,650.5 million in 2004 and is predicted to have steady growth in the following years (Han, 2005).
Han (2005) explained that the packaged software market in China includes three main primary markets, which are: applications, application development and deployment (AD&D) software, and system infrastructure software.
Application software ranks first in the Chinese packaged software market with 45% of total market share in 2004 (Han, 2005). This is followed by system infrastructure software, which had 33% and then AD&D, with 22%.
Han (2005) also gave an insight on the recent development of China’s packaged software market. One example of the changes that occurred is that software vendors are now resorting on the aggressive China strategy. Vendors that had already entered the China market either increased their investments or set up global development centres directly in China. Another change is the gradual increase of emphasis in service. Services became more important in clients’ vendor selection criteria. Clients are gradually realizing that purchasing good software products is not enough (Han, 2005). Furthermore, vendors now relied more on channels and partners, especially systems integrators (SIs), independent software vendors (ISVs), and VARs (Han, 2005).
Downturns of China’s Software Industry
One of the disadvantages of China’s software industry is the prevalence of fly-by-night small software companies (Heng, 2005). According to Heng (2005), China currently has over 5,000 software companies and 14 software parks across the country, but most of those companies are small companies that do not have any high level of operation and are only concerned with profit. It was also stated: “With no outside restraints the software industry will inevitably fall into a vicious circle: There will be no end to the endless cycle of low-level developing work by numerous small companies, which due to their fragility facing harsh domestic market conditions, forces in turn more companies to become low-level operations. What we should do is to weed out those fly-by-night companies to make room for developers doing real business.” (Heng, 2005, online).
Another disadvantage of China’s software industry is that its growth is being stunted by the focus of companies on developing software that is sure-money (Heng, 2005). Companies are not willing to invest on new software products that they perceive will not make money. As Heng (2005) pointed out, no one dares to try the most profitable and technology-demanding fields such as operating system and database design. There is also the rampant piracy – both in selling and use. Statistics show that of all general software used on domestic market only 5 percent are of copyrights, a terrible figure that frightened away most companies from the market (Heng, 2005). However, if there is advantage for large software companies like Microsoft in this type of predicament, software piracy in China helps promote and popularize the software it pirates like what happened to the Microsoft word processor. Cited from Heng (2005), Bill Gates stated: “It earns Microsoft fame, if not direct profits, which will, in turn, bring huge economic gains on the enterprise market.” (online)
The Chinese software industry is also plagued with the lack of computer software industry to support the companies and the unbalanced prevalence of blue-collar workers over white-collar workers (Heng, 2005).
AIMS AND OBJECTIVES
The aim of this paper is to conduct a case study of the Microsoft and SAP regarding their entry on the China software market and reflect of their strategies. In this process, it was able to collect many reference materials which where then thoroughly analyzed for the purpose of gathering the information that they contribute and be able to assess how each of these information correspond to each other.
The objectives of the study are as follows:
Ø To be able to distinguish the useful strategies from the ‘not useful’ ones when entering China’s software market.
Ø To be able to provide a framework of entry strategies using the 4ps of marketing.
Ø To know the difference between the style of Microsoft and SAP.
Ø To determine the reasons for prominent software piracies based on the Microsoft and SAP marketing measures.
Ø To determine the possible measurements that Microsoft and SAP use in their software to prevent piracy.
STATEMENT OF THE PROBLEM
The problem that was explored in the study is the strategies of the two global software companies – Microsoft and SAP – in entering China’s software market. They were explored by investigating and analyzing several publication items related to their strategy in entering China.
The following research questions were explored:
Ø What are the market entry strategies of Microsoft and SAP in China?
Ø How do their strategies differ?
Ø Which strategies worked and which strategies are suited as a market entry in China’s software industry?
THEORETICAL FRAMEWORK
The 4Ps
Product refers to goods and services a company offers to its potential customers. Product can be further subdivided into several elements. One of these is position, the place the product occupies in the consumer’s mind. Position is determined by marketing strategists and then communicated to the public by advertising slogans such as “We do chicken right”; “We try harder”; “The right choice”; and the like. Other product attributes complement and reinforce positioning. Positioning is of paramount importance to differentiate your products from competitors’ (Soares, 1991). The company must also strive to ensure that they will meet the standards of their consumers while also considering the different backgrounds of the consumers, and ensuring the possible improvements that can be done to their products. Innovation is an important part of the product, as can be shown by the various hardware and components currently being sold, one of which is the iPod as sold by the Apple Company. Such outcome will show the consumers the ability of the company to mould accordingly to their consumers’ styles while providing easy access.
Price can be determined in a number of ways. When introducing new products, marketers must decide to either skim (high prices) or penetrate (low prices) the market. The dream is to achieve market penetration with high prices. To skim or penetrate, or later to initiate price changes or respond to others’ actions, requires a good deal of strategizing. The same is true when planning discounts and allowances, credit terms and payment periods, and all price-related activities (Soares, 1991).
Place, or distribution, refers to channels that move goods and services from manufacturer to consumer. On the surface, this may not seem much of a communication activity (at least not from organization to consumers), but it is. The shipping companies could be a great example. Federal Express advertises it always knows where your package is especially if you absolutely, positively want to know. UPS underscores its reliability with this credo: The tightest ship in the shipping industry (Soares, 1991).
Promotion, the fourth variable, ties together the subtle communication efforts of the other three variables in an overt way. Thus, marketing management (i.e., analysis, planning, implementation, and control of the marketing mix to reach target market objectives) consists largely of coordinating people, resources, and budgets to communicate to relevant publics about an organization’s products and services. Promotion, as the fourth P and the coordinating function that integrates and unites the other three P’s, is the heart of marketing (Soares, 1991).
SIGNIFICANCE OF THE STUDY
The study may be significant first to researchers and students of marketing because the results will contribute to the amount of studies that were conducted before. The findings that were derived from this study may help establish knowledge about the strategies of market entry on China, specifically in the software industry. This will surely be a great find because it will come across several issues such as piracy and how the companies handle that.
Another important contribution of this study is that it may also be able to help China’s software industry to adjust to the problems in currently face. The lessons and comparison of strategies from two software giants such as SAP and Microsoft can result to the formulation of effective frameworks that will help local Chinese software companies strategize their moves.
Finally, this study may be significant to SAP and Microsoft Corporation because it will help them know the strategies of the other and be able to analyze the pros and cons of such strategies. They may be able to identify or reflect to what is good and what bad and omit and retain those that are necessary. With the increase of piracy in the country and also the increased security of the software coding and authorization measures used by the company, there is the need to assess the measures used by the different marketing measures and how they can effectively counter these done by other corporations to avoid piracy. The importance of this idea is to help with the development of software that can cater to the different kinds of people who can afford such for their own advancement.
Research Process
The study was implemented in such a way that the reader will have greater understanding through the initial discussions concerning the current status of the software world as related to their market; more specifically, there is also the focus on the Microsoft and SAP products that were included. After such discussion, the entire study continued to delve deeper into the marketing world of these software and tried to assess how these have anything to do with the corporations’ position when it comes to ensuring the lack of piracy on the products.
Different software marketing database from the Internet were explored. Several methods of acquiring the information were done, one of which was to also find online sites (some of which required subscriptions or reasonable amount of fees in exchange for information). It is most important that data on Microsoft and SAP’s market entry strategies were discussed. News database was also explored and related article were included for review and analysis. Finally, useful books from local libraries were also cited for additional references about the software market in China, all of which provided clear definitions and imagery on the current state of the software marketing in the particular country. All references are from 1993 onwards because it is the year Microsoft first entered the Chinese market.
After collecting data, important information were gathered from their sources including the references and the questionnaires; from the questionnaires, the raw data were compiled and, finally, assessed as based on the information gathered from the various references. Information from Microsoft and SAP will be separated. Important paragraph and themes about their strategies will be identified, compared, and analyzed.
Conclusions include comparisons and important variables that should be determined are: the strategies of Microsoft and SAP in foreign market entry; their strategies for China; the differences between their strategies; and the most effective and least effective strategies they pulled off. This is left off at the end of the study, where discussions and recommendations may also be found, as related to the subject that this study has found.
Chapter 2: Review of Related Literature
2.1. China’s Software Market
The onset of globalisation and the accompanying technological innovations have made the world software industry develop rapidly such that it is no longer dominated by software giants, United States and Japan (Li & Gao, 2003). The success of India is an evidence of this as it caught the attention of the academe, policy makers and the information technology business sector. Another new player in the industry, China, is being closely watched as it is considered to have the potential to become a powerful force in the global software and service market (Nasscom, 2002).
According to Kharbanda and Suman (2002), China’s information technology industry in which software development and IT solutions fall in, is now the third largest in the world and a major income earner for the country. They share that the progress of China’s IT industry occurred from 1995 – 2000 as its average growth rate was recorded at 31.4 percent which was three times higher that traditional industries in China such as manufacturing. Although the software sector contributed only a small part in the success of the industry, its growth is still undeniable as forecasts predict that software market share in the country will rise in the coming years especially with the encouragement given by the government (‘China’s software’, 2000; Gang, 2001; ‘China eyes’, 2002). There are also reports that the growth of the software market has led to more facilities to be established in the country devoted to the industry (‘China builds’, 2000; ‘Software industry’, 2001).
Nasscom (2002) reveals that China has a strong domestic IT market as shown in Figure 1 which has divided the industry in the three major sectors in China with the hardware sector being the largest due to the manufacturing capabilities of the country.
According to Li and Gao (2003), China’s software industry can be traced back to the program launched by the government to develop the software industry in the 1980s. At the end of 2000, China had over 10,000 software companies with focus on research and development (Kharbanda & Suman, 2002). Considering that the software development program is already more than two decades in the making, one would expect that China should have surpassed India’s achievements. It has instead, adapted a slow and steady pace which is attributed to the relatively low achievements in education with which skilled workers needed in software development are needed (Li & Gao, 2003). However, the progress of China’s software market is still significant as shown in Figure 2 and it also includes the main segmentations of the software market namely: platform software; middleware and application software (Kharbanda & Suman, 2002). According to Nasscom (2002), the growing market has attracted many foreign software companies especially as trends indicate that growing segments include operating systems; embedded software; network security software; information security products; applications software in management; education software; office software and ERP and CRM solutions. The growth also precipitated to the emergence and popularity of domestic software products and brands such as Ufsoft; Newgrand; Legend; Digital China, Redflag Red Office; Kingsoft WPS Office and Evermore office.
China is just beginning to cultivate its people to become a veritable talent pool of skilled software developers which accounts for the higher IT services market indicated in Figure 1 and this has been broken down into five different functions namely: consulting, implementation, operations management. Support services and training shown in Figure 3 (Nasscom, 2002).
2.2. Critical Success Factors
One of the core characteristics of a successful organization is focus. Since the business environments are fast becoming more and more complex added to the fact that it changes rapidly and dynamically, businesses need to concentrate on a few key elements that are most important to their organizations survival. Thus, it is not surprising the critical success factors keep the organizations from straying too far with external issues not relevant to their company’s success.
Critical success factors (CSFs) in business, are the limited number of areas in which results, if they are satisfactory can ensure that successful competitive advantage for the company (Thierauf, 2001). Determining these factors is an old concept in business because there were great leaders throughout history who have identified and addressed key factors to achieve their successes. There is no one definition of CSF but it is considered that these are the areas which the company need to concentrate on to flourish. Therefore, the activities should be carefully monitored and guided by the management.
Chung (1987) defined critical success factors as managerial factors that create a competitive edge for a company in its respective industry. There is no specific process in identifying and executing critical success factors in strategic management planning. This is the reason why Thierauf (2001) asserts that different companies which have similar structure can conduct its market entry forming different strategies which lead to the development of various critical factors. As the primary means for an organization to achieve its strategy, critical success factors must take into account the differences in the environment and organization that exists.
The critical success factors of the company can be identified through the chosen strategy because they outline the various aspects within the organization where the company should perform well to be able to maintain its competitive advantage and achieve its desired organizational goals and objectives. The CSFs also help the management to form the skills required for the strategic planning process which necessitates that a proper set of objectives, goals and strategies be actively developed and executed. Friesen and Johnson (1995) states that the CSFs help in decision making process because it introduces a new way of decision making. In contrast to traditional decision making where decisions are made based only on intuition or perception of the over-all scenario, using critical success factors as guidelines makes the organization focus on strengths, weakness, opportunities and threats for the company.
In addition, critical success factors are employed as the main framework by which the organization conceptualizes a strategic plan or quality improvement plans. The quality improvement process is made easier through CSF identification because identifying key areas for improvement would aid in a more thorough evaluation of both quality management and customer satisfaction. An examination of both can lead to an improvement in company performance in terms of efficiency and effectiveness.
There are primary sources of critical success factors which have been identified by Thierauf (2004). The structure of a particular industry is one of these primary sources because each industry has a unique nature which guarantees a set of CSFs which can be determined through an examination of the characteristics of that particular industry. Another set of sources is the combination of competitive strategy, industry position and geographic location because these elements influence the market in which the organization of choice exists. The next source is the environmental changes because as the economy changes and other external factors, critical success factors concerning those changes can become detrimental to the company. The last source is the temporal factors which are caused by internal organization considerations. These four primary sources can be determined to properly identify the critical success factors which are suitable for the company.
This concept was brought to the forefront by John F. Rockart and it was intended to be a tool for planning and designing management information systems (Rockart, 1979; 1982). The concept has successfully depicted the ultimate corporate goal of operating a business on a high level of management that is capable of concentrating on the over-all scenario critical for the organization’s success. It has evolved from Rockart’s idea to a useful management tool used for strategic planning process and solving operational problems such as quality control.
With Rockart’s concept of the CSF, there was also a six-step process that serves a major guideline for the organization to meet its set goals and objectives. The first step in the process is in understanding the mission of the organization. The mission statement of a company is important because it uniquely defines the business and the people working in the organization (Kotler & Armstrong, 2001). According to Morrisey (1988), there are four major reasons for creating a mission statement. The first is it ensures that the members of the organization at all level will have a common and unified purpose. The second is that it also gives the strategic planning decisions a point of reference to follow. The third reason is that the mission statement seeks to achieve commitment for the unified purpose within the organization because complete cooperation makes it easier to implement strategic goals which sometimes necessitate changes inside the company. The last reason is for the organization to achieve external support for the organization.
According to Friesen and Johnson (1995), having a mission statement will bring forth a unified action through which strong performance will be developed. Moreover, it is considered as an important element in the strategic planning process because it helps in identifying critical success factors.
The second step in the process is identifying the critical success factors because it will be easier now to do for there is already an understanding of the mission statement. The CSFs can be developed through acquiring the input of all employees and not just that of the managerial level because the participation of employees in identifying the critical success factors will make the final implementation easier for they will feel that they were with the company all the way. Employee participation in identifying the CSFs is important because these factors will affect the whole organization. This will ensure that the mission, objectives and goals will be carried out effectively. The average number of CSFs that would be ideal for the company is five to seven because listing more would be difficult for the company to address.
Determining the critical success factors of an organization proves to be highly effective for top management and strategic planners in defining the significant information needs of the company. Thus, there is a need to clearly identify these critical success factors because they directly influence the goals and strategies. They should also be clear because each department of the organization have different needs so these should be properly segregated and formed into a list of critical success factors that are named in a clear and meaningful way (Friesen & Johnson, 1995).
The next step is creating a strength and weakness profile of the company. According to Friesen and Johnson (1995), this is the most time-consuming and exhaustive step in the entire process. However, executing this properly will be the hinge that determines whether the process will work successfully or not. The profile is important to be properly identified because it helps in determining the feasibility of the CSFs identified by the planning team. Another reason is for the planners to correlate accordingly the CSFs with either the strength or the weakness of the company and decide on the proper company resources to tap for the CSF. In relation to this, the profile would then enable the planners to create a separate profile for each factor. Moreover, creating a profile will help planners better understand the critical success factors and its relation to the goals and objectives before creating the strategies and action plans that would address these. Finally, the creation of the strength and weakness profile should be the done with the full cooperation of all levels of the organization because the planners need to analyse the real scenario to properly identify which are the strengths or the weaknesses of each department and of the company as a whole.
The fourth step in the process is the development of company objectives and goals. The mission statement of the company needs to be turned into detailed objectives for each department (Kotler & Armstrong, 2001). These objectives and goals will support the foundation laid by the mission statement. These would also do a two-fold action. They will either capitalize on the strengths or compensate for the weaknesses of the company. In addition, objectives also serve as the basic outline for the action plan which the organization will follow (Mankin, 1984). Furthermore, the goals should be definite because it needs to present a clear image to all the employees of what the organization hopes to attain in that period of time.
Implementation of the action plan is the next step in the CSF process. According to Friesen and Johnson (1995), each plan should be executed by the employee or department who is directly responsible for ensuring that the critical success factor is properly addressed. This needs teamwork to successfully implement it. If there are problems that would be encountered during the course of implementation, then they should be directed to a specially formed task force, which is usually the strategic planning committee.
The last step in the process is an evaluation of the progress of the implementation plan. This step will enable planners to make the necessary changes such as updating, reorienting or reprioritizing the objectives and goals in accordance to the original CSFs. The status of each action plan should be monitored carefully because failure to do so would create future problems in case the action plan is not working at all in accordance with the company objectives. Moreover, a periodic evaluation of the mission statement, objectives and goals, strengths and weakness profile, critical success factors and action plans is important to ascertain that all the components are working together and coping with the dynamic changes in the business environments and the current demands of the market.
2.3. Critical Success Factors Application to Software Development Industry
In general, the software sector is an industry within an industry because it is part of the information technology industry. It includes all the activities in the IT sector with the exception of hardware and manufacturing. The two major groups in the software industry are the customised professional services and standardised products which are also divided into enterprise solutions and packaged mass-market software (Li & Gao, 2003). In the age of global economies where gaining competitive advantage is the name of the game, it is important to be able to identify the critical success factors which would be helpful for the players of the industry.
Moreover, as a growing industry in China which is still considered as a developing country for its growth hasn’t reached its full potential yet, it is also important to understand the importance of the software industry’s progress to China (Kharbanda & Suman, 2002). According to Li and Gao (2003), analysis should be done from both the demand and supply sides to properly understand the importance of the software industry to a developing country. In terms of demand, developing countries have come to look at India’s success to consider that the software industry offers a huge potential in exports. The profits earned in the global market contribute to the macroeconomic leverage of the country. Another factor in the demand side is the possibility that the productivity and quality improvements implemented in the software industry will influence other sectors in the domestic arena as most companies from different industries have joined the information age-dictated way of doing business. On the other hand, the supply side dictates that developing countries have the competitive advantage through the low-levels of barriers of entry and low effects on the economies of scale. Thus, it is fast becoming a trend for developing countries to use the software industry to enter the information and communications technology industry.
Although the entry modes into the industry are fairly easy, it is not enough to ensure success in the said sector evident in the need to identify the critical success factors which companies need to take note of. Antony and Banuelas (as cited by Antony & Fergusson, p.1027) have named six critical success factors for the software development industry based on the results of the survey conducted for their study. The following are listed according to rank: reliability, functionality; cost; correctness; timeliness and maintainability. This list was further developed by Antony and Fergusson (2004) who turned these into ten critical success factors in relation with the Six Sigma strategy namely: leadership engagement and uncompromising commitment of top management; supporting organisational infrastructure; cultural change; Six Sigma training; linking Six Sigma to business strategy; accountability; customers’ involvement; project management; project prioritisation and selection.
2.4. Critical Success Factors: The Role of Marketing
With the boom of the worldwide software industry in the 1990s, many software companies have neglected to take into account the role of marketing as an important ingredient to success. Thus, when economic slumps have hits various parts of the world, said companies had to downsize and evaluate their business strategies including refocusing on successful marketing approaches.
Beever (n.d.) has named six critical factors involved to be considered in marketing approach which will help launch the company to success. First is to research and validate the company’s strategic decision which consists of the corporate vision, mission and objectives. These areas would then dictate how the company will go about its marketing strategies. The second stage is the marketing message which should be congruent to the plans and objectives of the company. Next is communication not just to the target market but also to the whole organisation. Even though markets today are customer-driven, it should also be taken into consideration that the marketing message should be understood by employees of the organisation who will do the execution of the marketing plan. This should not be limited to the salespeople but also to all the departments because everyone should feel that they are working towards achieving one single goal contained in the marketing message. Execution of the message is critical and is the fourth factor in the mix because implementation needs specific variables such as fitting resources to the business; cost-effective measures and response compression (Beever, n.d.). The fifth factor is the ability to analyse results of the marketing activities to be able to generate better decisions. This is important for software companies because leads gathered from advertising may not be converted into sales which results to waste of money better spent in research and development. Lastly, customer relations management is an important factor of marketing because it is the ability to understand how consumers relate to the products or services being offered by the company. Software companies should take into account that customer satisfaction would lead to a steady consumer base and brand loyalty which is important in the crowded software marketplace.
2.5. Synthesis
China’s software market is a booming business which is ripe for competition not just from foreign companies but local software developers as well. Although local companies are new to the industry as China’s IT capabilities have just been revived, they are beginning to learn the components which ensure growth and development.
This is shown by Rockart’s critical success factors which indicate the main areas in the industry which companies should focus on to ensure success. Software companies, especially in China as it is still a young market, should take these factors into account in developing their business strategies. However, they should also not forget that recent events in the worldwide software industry resulting from the economic slumps have made most companies return to integrating marketing in the implementation of the critical success factors of the industry. It is through this booming IT business that is helping the country, yet is also giving problems to the original software developed by international companies due to the presence of piracy. The business slumps that the country is experiencing may be a considerable factor for the piracy business and also the changes in the marketing measures used by the corporation with regards to the safety of their software and their intellectual properties. Many of the changes that the corporations are focusing on is to make these software available to a wider market while also ensuring that their IT business will continue to boom over the years in an effort to let the people experience the technology that they can afford while also giving them the chance to develop their own process.
Chapter 3: Research Design and Methodology
3.1. Statement of Design and Methodology
3.1.1. Research Design
Research requires an organized data gathering in order to pinpoint the research philosophies and theories that will be included in the research, the methodology of the research and the instruments of data interpretation (Saunders, Lewis & Thornhill, 2003). This study employed the descriptive approach which is used to gather information about the present existing condition. The purpose of employing this method is to describe the nature of a situation, as it exists at the time of the study and to explore the cause/s of particular phenomena. The researcher opted to use this kind of research considering the desire of the researcher to obtain first hand data from the respondents so as to formulate rational and sound conclusions and recommendations for the study. Specifically, this research is a case study which is a form of inquiry focusing on an in-depth investigation of a single instance or event (Saunders, Lewis & Thornhill, 2003).
The research described in this document was a two-phased research of simultaneous quantitative and qualitative research methods. Qualitative methods permitted a flexible and iterative approach. During data gathering the choice and design of methods are constantly modified, based on ongoing analysis. This allowed investigation of important new issues and questions as they arise, and allows the investigators to drop unproductive areas of research from the original research plan (Saunders, Lewis & Thornhill, 2003). On the other hand, quantitative research method was used since this research intends to find sound evidence.
3.1.2. Data Acquisition
This study used two sources of research namely: primary and secondary research. These would complement each other in the data analysis because they would support or disprove the other which would eventually make the research more encompassing because all pertinent prevailing views were covered.
The primary source of data came from a survey conducted by the researcher among randomly selected junior-level managers of three manufacturing firms in China as well as two IT solution providers. There were also in-depth interviews of senior-level managers of the said companies. The sample size for the survey was 150 with 100 in reserve in case inconsistencies in the data gathered would be found in the course of analysis. Simple random sampling was conducted to select the actual respondents from the company. This method involved the selection of the sample at random from the sampling frame through the use of random number tables (Saunders, Lewis & Thornhill, 2003). Numbers were assigned for each employee in the master list. These numbers were written on pieces of paper and drawn from a box until the sample size is reached. Then the researcher drew 100 more for the reserve respondents.
The researcher sent a letter to the Human Resources Department asking for a list of all employees and the purpose of such a request. The letter also discussed in detail the value of the research being conducted and assured the department that all information given will remain confidential with no sensitive data regarding company insider information on technology and design would be asked from the respondents.
On the other hand, the secondary research data were obtained from previous studies on the topic. For this research, the researcher summarized and analysed the information gathered from published studies found in academic and business journals and articles from relevant newspapers. The conclusions derived from the secondary data makes an appropriate foundation for the primary research data obtained.
3.2. Data Collection Instruments
The researcher utilized the survey questionnaire to gather information. The type of questionnaire was delivery and collection questionnaire wherein the survey form was delivered directly to the respondent and collected later. This prevented any inconvenience for the employee as such that the respondent could accomplish the survey at any time he chooses.
The survey questionnaire was used as the main data gathering tool for this research. It was divided into two parts:
1. Socio-demographic characteristics of the respondents which includes age, gender, civil status and the number of years it has worked for the firm as well as its position within the company.
2. The researcher also prepared a questionnaire that explored the opinions of the employees on the critical success factors of the software development industry in China and the role of using a marketing approach in launching software products in the country. The layout of the questionnaire was simple and the wordings of the questions clear, readable and the questions order would be easy to follow to encourage more response. The questionnaire was of a non-threatening nature and can be completed within 30 minutes. The respondents graded each statement in the survey questionnaire using a five point scale that would measure the degree of their agreement. The respondents were given five response choices whose equivalent weights are as follows:
Range Interpretation
5 Strongly Agree
4 Agree
3 Uncertain
2 Disagree
1 Strongly Disagree
Due to the sensitivity of the information being obtained, the survey questionnaire was decided to be the most appropriate tool to use. It was important that the respondents be open and honest in their responses because their answers would provide the necessary support for the secondary data of this study. The use of this survey questionnaire provided the researcher the venue to explore the views and opinions of employees regarding critical success factors and the role of globalization. Lastly, the questionnaire was designed to allow the collection of information that permits statistical analysis.
There were also interviews for the managers of the manufacturing firms as well as the IT solution providers. According to Saunders, Lewis and Thornhill (2001), the use of the interview is to help the researcher gather valid and reliable data which are relevant to the research questions. The unstructured interview or in-depth interviews were employed for this research. Although this type of interview does not need to have a pre-determined list of questions to be asked during the course of the interview, the researcher opted to have a standard set of questions to be asked. This would make the interview flow easier as well as the forms to be filled out during recording more manageable. With this type of reasoning, it can be argued that structured interviews are more appropriate; however, it does not permit to deviate from the list of questions such as to ask follow up questions regarding a response of the interviewee which in-depth interviews more than allow to be done. The researcher has sent request letters to the selected interviewees to set up the most convenient time for the interviews to be conducted.
The interviews were recorded with the permission of the interviewees. According to Easterby-Smith, Thorpe and Lowe (2002), there are many advantages for recording the interview, all of which are delineated here. The main advantages are that it allowed interviewers to concentrate on both questioning and listening and that accurate and unbiased record is provided. Other advantages include: the researcher can review the interview, permanent records are created for future use and direct quotes can be used for the conclusion.
3.3. Methods of Data Analysis
The statistical processing of the data gathered is an important step because it translates the raw data into quantifiable terms. Thus, it is imperative that a researcher apply the most appropriate statistical tools in order to provide the most accurate processing of the data.
Results were analysed through percentage which is commonly used in descriptive statistics, which is relating a part to the whole. The formula in computing percentage is as follows:
n
% = ——– x 100 ; n – number of responses
N N – total number of respondents
The summary of the results were then be put into charts. Each chart has text and captions that serve as the explanation for the group of data.
There will also be a PESTEL analysis to be conducted from the information gathered from the surveys and interviews. PESTEL analysis is an important tool used by marketers to analyse the market environment of the industry specifically the political, environmental, social, technological, economic and legislative factors concerning the company (‘PEST analysis’, 2005). It investigates both the micro- and macro-environment of the company.
Credit:ivythesis.typepad.com
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