International Business Plan Of Axis Mutual Fund

Executive Summary

Axis Mutual Fund, a subsidiary of Axis Bank Limited, is an out-performing asset management firm that is aiming to expand it’s operations in Australia. In this quest, the firm is drafting a corporate plan that would ensure it’s successful entry in the foreign market. The international business plan of Axis Mutual Fund is drafted after a careful consideration of the SWOT analysis of the company. The analysis revealed that the company has brilliant growth opportunities in Australia and hence a competitive market entry strategy will ensure the firm’s succession in the target market. The competitive strategy of Axis Mutual Fund would be based on a flexible operating model that leverages the use of innovative technology and ensures long-term viability. This tactic has been designed to facilitate the company’s growth amidst the global crisis and to ensure the company’s progression in the presence of competitive asset management giants.

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The Axis Mutual Fund centers it’s international business plan on a core market entry strategy that enables the company to pursue a strategic Alliance with one of the fast-growing Australian asset management companies, Moelis Australia. This strategic partnership would enable the company to expand the variety in it’s financial product schemes, adapt knowledge of new Australian schemes like SIV, re-organize it’s approach towards fixed income spaces and adapt new disruptive technologies like ANALEC. The company had also considered two other market entry options that they could have been included in their international business plan. The first option involved acquiring Sigma Funds management and entering the Australian market as an independent entity. The second option involved entering into an equity joint venture with Australian Eagle asset management and forming a third independent fund management entity. These two options required a high amount of risky investment and hence, entering into a strategic partnership seemed like the most viable option considering the investment and the current global pandemic.

The Axis mutual Fund should acknowledge marketing and R&D considerations as an integral part of it’s competitor strategy. Efficient marketing tactics like content marketing and social selling on social media platforms can be used to leverage customer support and raise brand awareness. Further, investment in R&D would enable the company to adapt innovative business tactics and disruptive technologies ahead of the laggards, thereby allowing them to attain a competitive advantage in the industry. Considering the global economic down-turn and the innovation standards in Australia, it is integral for the fund house to rebuild it’s production and customer-engagement model when entering the new foreign market. The new operational model should be more customer-centric and would employ advanced technologies like machine learning and AI to increase the efficiency of the business operations.

The competitor strategy of the company should also be fine-tuned to tackle various international HRM issues that would arise due to the strategic alliance. Hence, a successful execution of the strategic partnership via a well-equipped market entry strategy would enable the firm to prosper in it’s target market and gain long-term progression.

Introduction

In this competitive corporate scenario, it is integral for companies to track market opportunities and continuously expand their businesses in order to ensure long-term progression (Lo & Alena, 2018). In this quest, many organizations may tap new foreign markets to internationally expand their market operations and attain a sustainable competitive advantage in their industry. It is essential for these firms to analyze their market opportunities and their chances of succession in the targeted market. Furthermore, such companies should also develop a competitive market entry strategy after assessing the marketing, HR and technological policy considerations in the target market. This thoroughly developed international market analysis would enable the company to successfully operate in the prospective market (Shen, Puig & Paul, 2017).

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This report is primarily designed to discuss the competitive strategy of Axis Mutual Fund while entering the Australian Market. It also highlights the marketing, HRM, R&D and other corporate policy dynamics of the Australian market and mentions the most viable market entry strategy that Axis Mutual Fund should adapt in order to thrive in it’s targeted Australian market.

Conclusion of SWOT Analysis

The SWOT analysis of Axis Mutual Fund showed that this company is one of the most out-performing asset management companies having a diversified portfolio of high return mutual fund schemes. The company operates with a customer-centric philosophy and ensures the provision of integrated end-to-end asset management solutions via a strong finance team on board (Bazaz, 2019). However, the fund house does not have an innovative approach in dealing with the fixed income transactions and also lacks disruptive technological innovations that tend to weaken the organization’s position internationally (Commonwealth Australia, 2017). Axis Mutual Fund has various opportunities to expand in the Australian market since the country possesses the largest asset management fund in the Asian market, which gives the company an opportunity to invest in a diversified pool of mutual funds and pension schemes in Australia (Tang, 2020).

However, despite the opportunities, the company faces some potential threats that would jeopardize the company’s functioning in the Australian market. The company’s stance in the targeted market would be threatened by some outperforming MF companies in Australia like Ausbil Dexia, which employs innovative technologies and hence, acts as a potential barrier for entry for Axis Mutual Funds (Commonwealth Australia, 2017). The SWOT analysis of the Axis Mutual fund reveals that the company should devise an efficient market entry strategy that could enable the company to efficiently execute it’s objectives in the Australian market.

Competitive Strategy Analysis

When organizations venture into international markets, they endeavor to succeed in the new market by efficiently organizing their business operations. It is integral for the organization to devise a competitive operational strategy that would guide the objectives, goals, resources and policies of the firm in the presence of intense industrial rivalry. Hence, a competitive strategy analysis would determine the productivity of the company’s performance in the presence of it’s consequent rivals (Yan & Liu, 2017). The Axis Mutual Fund faces enormous competition from out-performing asset management groups like Macquarie Investment Management, which has enabled the company to formulate a powerful competitive strategy to enter the Australian market (Hurwood, 2020). Amidst the global crisis, the Axis Mutual Fund has centered it’s competitive strategy around a flexible operating model that leverages the use of disruptive technologies and focuses on long-term viability. The company should also focus on reinforcing their retirement fund schemes which are highly valued in Australia (PwC, 2020).

This competitive strategy will bear productive outcomes for Axis Management Limited. A flexible operating model would embrace the transformation and disruption that revolutionizes the asset management dynamics of the economy post COVID-19 crisis. It would also enable the organization to acquire new capabilities and competencies required to operate successfully in the Australian economy (Kerrigan, 2020). Furthermore, the adaption of innovative technologies such as block chain, AI and machine learning would enable the company to facilitate and engage customers effectively during the global unrest. The use of advanced technology would also enable the asset management company to meet the standards of MF competitors in the Australian market (Andrews, 2020). Lastly, the competitive strategy centers on an agile and an iterative approach to generating customized financial solutions in order to generate long-term gains (Kerrigan, 2020). The competitive strategy analysis of the Axis mutual Fund reveals that when the company enters the Australian market, it would be equipped enough to efficiently suffice in the asset management market of Australia.

Market Entry Option Analysis

When organizations choose to tap foreign markets, they need to decide the entry mode that would enable them to accomplish their goals in the overseas market. The market entry modes are essentially structural agreements that would enable a firm to carry out it’s business operations in a foreign market with it’s own corporate strategy and resources (Shen, Puig & Paul, 2017). The Axis Mutual Fund has several market entry strategy options to consider while entering the Australian market. These include

Strategic Alliance

Forming a strategic alliance with a local firm is a powerful market entry strategy that many organizations may employ in order to successfully tap an overseas market. This entry mode may enable the firm to enter into a contractual agreement to operate towards common business objectives with a local partner who has well-versed market knowledge and has the disruptive technologies needed to excel in the local market. Hence, with this market entry strategy, the foreign firm enter into a low risk investment and bears higher chances of succession (López-Duarte, González-Loureiro, Vidal-Suárez & González-Díaz, 2016).

Axis Mutual Fund can adapt this market entry strategy and enter into a strategic partnership with Moelis Australia (MA) Asset Management Division, a fast growing fund house dealing in a diverse array of mutual fund schemes. This strategic alliance will benefit the Axis Mutual Fund since it would allow the company to share the real-state, credit and venture capital Expertise with MA Asset management, gain knowledge about new funds like Significant Investor Visa (SIV) and acquire the innovative approach of dealing with the fixed income funds. Furthermore, Axis Mutual Fund would also benefit from the advanced software and technologies like ANALEC that is adapted by the company (Moelis Australia, 2020). However, Axis mutual Fund would have to pour more investment in this venture and may encounter challenges in integrating with the MA Asset company’s corporate culture.

Acquisition

An acquisition is a market entry tactic in which a firm purchases a foreign organization with the aim of expanding their reach to that market. This is a powerful market entry strategy since it guarantees a quick and an established access to a new market (Lin & Ho, 2019). Axis Mutual Funds can acquire Sigma Funds management, which is a small a Australian fund company that has been struggling in generating money for some of it’s biggest hedge funds. The company is based on a valuation focused investment approach and deals in high conviction portfolios (Sigma Funds, 2020). Acquiring this asset management firm would add value to Axis Bank Mutual Fund by enabling the firm to grasp Sigma Funds’ market share and also owning it’s brand identity. It will also facilitate the Axis MF by immediately getting knowledge of the technologies and the strategies oriented with the Australian asset management industry. However, this route requires a lot of investment and well though-out operational strategy (Lin & Ho, 2019).

Equity Joint venture

An equity joint venture is a market entry strategy that enables a foreign firm to partner with a domestic firm in order to form a third independently managed company. In this mode of entry, both the firms invest money and hence, share equal ownership and control of the newly formed corporate entity (Channon & Sammut-Bonnici, 2015). Axis Mutual Fund could also adapt this marketing strategy and enter into a joint venture with Australian Eagle Investment Management, which is a customer-centric large cap equity growth management platform that generates superior returns on fund schemes. This joint venture will lead to the development of a new international fund management entity in Australia (Australian eagle, 2020). This joint venture would benefit the Axis Mutual Fund since the fund house can expand their market reach, learn new asset management techniques and generate handsome revenues. However, this venture would require greater risky investment, may involve clash of cultures and may fail if the objectives are not executed with utter efficiency (Channon & Sammut-Bonnici, 2015).

Preferred Market Entry Option

The firm should use the market entry strategy of entering into a strategic alliance with the Moelis Australia (MA) Asset Management Division. This tactic is a safe entry mode considering the present global crisis concerning COVID’19 which has badly affected all world-wide economies. Pursuing a strategic partnership with the rapidly-growing MA Asset Management would enable Axis Mutual Fund to prosper in the Australian market by acquiring technological competencies and facilitating customers with a wide array of innovative high-return investment solutions (López-Duarte, González-Loureiro, Vidal-Suárez & González-Díaz, 2016). The Acquisition is not a viable alternative since it requires a large pool of investment which is impossible to arrange given the present COVID’19 oriented economy. Furthermore, the idea of joint ventures is also not the most optimum alternative since this market entry strategy is a high-risk investment and hence, is not viable to be pursued (Stier, 2020).

Marketing and R & D considerations

A strong marketing and a research and development strategy is integral in enabling a business to succeed in the long run. Successful marketing efforts launched by the business enable it to attain customer support, enhance brand awareness and ultimately gain a sustainable competitive advantage in the industry (Agrawal, 2016). The R & D function further acts as a catalyst for organizational growth by enabling a business to adapt innovative and creative strategies that can be used to attain market leadership and stay ahead of laggards (Ghaffar & Khan, 2016).

For Axis Mutual funds to efficiently execute the strategic partnership with Moelis Australia asset firm, the firm must consider marketing and R&D as a prime component of the competitor strategy. The fund houses should strengthen their marketing operations by strategically positioning all their fund schemes for their respective Australian target markets. Furthermore, the asset management company should use content marketing and personalized social selling on social media forums to promote their wide range of schemes including real-state, credit, debt and venture capital schemes to attract clients. These two fund houses can measure the success of their marketing tactics by using big data and investor data analytics (Kotzastavros, 2019).

Axis Mutual Fund and MA asset management should further leverage their financial operations by launching and promoting competitive investor-preferred mutual fund schemes. In order to find out the Australian investor’s demands, these strategic partners should use their research and development operations. Furthermore, R & D can also be used to explore the technological advancements adapted by the current rivals in the asset management industry (Ghaffar & Khan, 2016). For instance, the R&D operations would discover the machine learning; block chain applications and smart analytics employed by the Australian Asset management firms and would thereby inspire these strategic partners to adapt these technologies to enhance organizational performance (Commonwealth Australia, 2017). Hence, the marketing and R & D considerations are deemed integral in the competitor strategy of Axis Mutual Fund.

Recommendations regarding production

The asset management industry will transform dramatically after the COVID’19 crisis. Both the institutional and retail buyers of the asset management products and services will become more demanding, powerful and complex and would claim time-constrained services. This predicament calls for a rebuild of the production and the customer-engagement model of the asset management firms. Both the Axis Mutual Fund and Moelis Australia should strategically design the financial mutual fund schemes with the objective of meeting the needs and the wants of the clients (Deloitte, 2020). For instance, a launch of diverse pension and saving fund schemes would excite the Australian investors in time of the COVID’19 catastrophe (Ong, Yazdani, Choksey & McMahon, 2020).

Furthermore, both of these asset management fund houses should efficiently employ advanced technology in the production, processing and distribution of the financial products in order to meet the innovation standards in Australia. For instance, funds can use artificial intelligence to efficiently generate trade ideas and generate investment decisions. Furthermore, machine learning can also be used to enhance the investment process within the firm. The company can also employ other technologies like block chain and smart analytics etc. These technological advancements would transform the production of services within the company dynamics and would thereby generate productive returns for the strategic partnership (Ong, Yazdani, Choksey & McMahon, 2020).

International HRM issues and considerations

Entering into a strategic alliance with a foreign firm bears considerable challenges for the HRM department of the organization. The human resource staff may encounter a diverse list of issues ranging from language barriers to labor market deficiencies, clash of corporate cultures and opposing employment practices (van Harten et al., 2017). The strategic partnership between Axis Bank Mutual Fund and Moelis Australia Asset management division would also generate some major HRM issues. Firstly, the differences in the national languages of Australia and India would create potential linguistic barriers which would negatively impact the hiring, training and development of the asset management staff within the Axis Mutual Fund. Moreover, greater reliance on advanced technology in delivering customer service by Moelis Australia would redefine the service delivery standards in Axis Mutual Fund and hence would complicate the operational procedures for the staff (Ong, Yazdani, Choksey & McMahon, 2020).

Furthermore, the corporate cultures of Australia and India are quite different which thereby creates a greater problem for the employees. The Australian culture is a more professional and dignified work culture that involves an organized way of operating. This is in opposition to the Indian Culture which is more casual, care-free and discriminatory in nature (Indian connection, 2020). The employees may be resistant to adapt to the Australian style of doing business and would get frustrated and exhausted due to the continuous pressure imposed by the management. Their frustration may also peak due to their fear of losing their jobs amidst the period of strategic alliance. The HRM department would face considerable challenges in maintaining the productivity of employees in these times. The HRM division of the firm will have to constantly endeavor to keep the employees satisfied by motivating them and acquiring their feedback (van Harten et al., 2017).

Conclusion

An analysis of the international business plan of the Axis Mutual Fund has shown that the company will face certain challenges in the HRM, service production, marketing and R&D divisions while executing the market entry strategy. Hence, the competitive strategy of the company should accommodate these organizational considerations in order to successfully execute the strategic alliance. Furthermore, the company should aim to execute the international business plan after a little settlement of the COVID’19 crisis in order to guarantee fruitful outcomes.  A successful implementation of the Axis Mutual Fund’s competitive market entry strategy would bear positive results for the strategic partnership and would enable the Indian Fund house to gain a greater share of the market.

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