Where does the company invest? In an age wherein companies going global usually think of Europe or China, it is more interesting and safe to enter emerging yet promising markets where future of business and establishment of a market base is secured. This is one primary reason why JOTT chose the Philippines as its investment destination. Per capita distribution of GDP in the Philippines is high at 7. 3% with a per capita distribution of $3300. The country also has a large potential market of an estimated 92. 6 million as of 2007.
Market penetration from the telecommunications industry in this country is at 46. 5% as of 2007, making it one of the major mobile services consumers in the region. This promising market is also backed up with a strong currency which has long recovered from the Asian financial crisis in 1997. The Philippine Peso is one of the strongest currencies in Asia and the world stable at the 42-to-a-dollar level. One thing more is that there is no strict price controls in the country and mobile services are priced primarily through the market.
Import restrictions also are friendly for foreign investors since restrictions mostly apply to main agricultural products such as rice. There is however, a five percent standard import tariff. This set-up has been secured particularly by the existence of a free trade agreement between the Philippines and the US. Furthermore, strong government ties have also been a significant factor in trade between the two countries. Filipino chocolate consumers are also adept to patronizing imported products more than locally-produced ones because of the local notion of colonial mentality.
The Philippines, by the way, has been a colony of the US for forty years in the early 1900’s which made the culture similar to that of the US. With this fact in mind, JOTT’s presence in the country will further boost cultural ties between the two countries. In conclusion, based on the information given, and weighing the pros and cons, investing for the setting up of mobile services operations in the Philippine market, is a wise move in order to increase profitability.
The conditions of the Philippine economy coupled with the size of potential consumers, and high product awareness for mobile services further supports the decision.
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