International Entrepreneurship
Introduction
An entrepreneur identifies the needs in society and then develops a product or service to meet such a need (Dana, 2011). In this way, they provide solutions to society and earn money as a by-product (Heinecke 2012). Such is the case with Arthur Zang, a young Cameroonian engineer who is the brains behind the Cardiopad. This innovative software allows medical staff in remote areas to monitor the cardiac health of their patients. Under normal circumstances, patients with heart diseases cannot access proper medical attention, such as the services of a cardiologist. The Cardiopad helps to fill this gap by relaying the cardiac data of a patient to a cardiologist via a cell phone. The cardiologist can then download this information using his Cardiopad, and transmit the diagnosis and prescription back to the health worker. This ingenious idea has won Mr Zang several international awards, including funding that has gone towards the development of a prototype of the device and securing intellectual property. However, Mr Zang would want to undertake mass production of the device, given its growing demand not just in Sub-Saharan Africa, but also in Asia. The report thus seeks to explore various creative sources of funding for Himore medical equipment, makers of the Cardiopad. Additionally, the report will explore new untapped emerging markets and possible entry strategies into the international market.
Identifying new creative sources of funding
When starting a business, the entrepreneur should ensure he/she has access to sufficient financing. According to Atherton (2012), there are various reasons that influence an entrepreneur’s decision regarding the financing source for a business start-up , with the biggest hurdle faced by entrepreneurs being able to source funds necessary to expand or launch a start-up (Berger, Cowan & Frame, 2011). One of the innovative sources of financing available to Himore Medical Equipment is seed investments. Seed investments or initial investments enable a business start-up to expand its business operations (Dana, 2011). According to Korosteleva and Mickiewicz (2011), start-up firms often are characterised by rapid growth potential because they engage in technological developments and as such, they may seek seed investment as a means of accelerating product development and achieving growth. Private investors constitute one of the popular ways of providing seed investments to business start-ups. In this case, private investors endeavour to invest capital into businesses that they regard as being successful (Korosteleva & Mickiewicz, 2011). Seed investments are often collected at the initial phases of fund-raising, and frequently entail funds from friends and family, as well as personal savings.
Another creative source of financing available to Himore Medical Equipment is business angles. These are investors who assist entrepreneurs to fulfil their business goals (Schmidt, 2014). Also, business angels assist entrepreneurs by sharing their financial resources, knowledge, and skills with business start-ups (Heinecke, 2011). Business angles bring the greatest value to business start-ups in the form of “smart funding” that encompasses providing business contacts, skills, and expertise, although they mostly invest in business start-ups for purposes of encouraging entrepreneurship, acquiring profit, creating new value, and encouraging business activity (Romans, 2013). Prior to investing in a firm, the business angle and the start-up founder enter into a contract that contains the investment time-frame, value of the investment, an exit strategy from the firm, and an investment price(?alopa, Horvat & Lali?, 2014). A study by Sharpe et al. (2009) that was conducted in the UK revealed that business angels play a fundamental role in financing high-tech start-up firms during their initial stages of development. A key reason for the important role of business angels in supporting start-ups at this early stage is that government supports them by exempting angel investors from taxing their investments. Giurca Vasilescu (2009) has identified business angels as a key link between developing firms and financing, beginning from the start-up phase up to the phase where the firm is ready to enter into the capital market. Besides, business angles offer managerial and financial support which acts as an extra alternative for the survival of the firm.
Himore Medical Equipment may also turn to Venture Capital investments as a source of business funding. This form of funding usually comes from companies, funds, or individuals that invest in the start-up business with the goal of assisting its development (Gregson, 2014). Venture Capital investments differ from bank loans in that after funding, Venture Capitalists seek an equivalent part of the firm's holding (Romans, 2013). On the other hand, banks fund a business from a predetermined time-frame, and at predetermined interest rates on the loan (Gregson, 2014). Another difference is that Venture Capital is immune to a firm's cash flow, and does not seek to create additional costs, whereas bank loans tend to be time-limited throughout the duration over which the firm is making the payment, and hence act as an added burden to the firm's cash flow (Rakar, 2006).
However, the most innovative source of funding available to Himore Medical Equipment is crowd-funding. This is a revolutionary means of funding a business start-up, such as Kickstarter, and users on such sites can then purchase shares in or make donations to the fledging firms (Young, 2013). We have three forms of crowdfunding: debt, donation, and equity (UK Crowdfunding Association, 2016). In debt crowdfunding or peer-to-peer lending, investors lend their money to start-up entrepreneurs with interest (Lurig, 2013). In reward or donation crowdfunding, people contribute without the desire to recover their money or realise an interest from it. Individual who contribute towards reward or donation crowdfunding do so because they wish to support a cause that they believe in. On the other hand, equity crowdfunding involves investing in a business opportunity in the hope of making a return on your investment, usually in the form of a stake or shares in the project, business, or venture.
Identifying new international emerging markets
The global demand for medical devices is on the increase, as individuals seek
Lane (2015) reports the findings of a survey conducted on 100 leading manufacturers of medical devices which shows that the Asian market will hit the $ 15 billion by the end of 2017. This constitutes a significant leap in just four years, considering the market was estimated at just $ 2 billion in 2012. Asia is an attractive market for medical devices on account of its large population size with the continent being home to 4.5 billion people, out of the estimated global population of 7 billion (Pacific Bridge Medical, 2012). Asian countries such as China, South Korea and India are characterised by strong economic growth, and this contributes to the growing market for medical devices. With an average 5-8 % growth in GDP, the region is by far the fastest growing economic region in comparison with Europe and the United States with a reported 0-2.5% economic growth.
An aging population is yet another factor responsible for the growing demand of the medical device market in Asia. The continent has an average life expectancy of 70 years, with projections showing that this will increase to 75 years in the next three decades. The aging population predisposes Asians to higher risk of chronic illnesses such as cardiovascular diseases, and hence the huge potential for the Cardiopad kit developed by Himore Medical Equipment.
Another international emerging market for medical device developed by Himore Medical Equipment is the South American region and in particular, countries such as Brazil, Chile, Argentina, and Venezuela. Like other emerging economies across the globe, South American countries have endured military coups, implosive economic growth, as well as financial crises (Aslan, 2012). Over the past decade, however, most countries in the region have enjoyed significant economic growth.
Untapped areas for meeting the medical needs of rural/remote communities
The Cardiopad will undoubtedly transform medicine in rural/remote communities. In Camerro for example, the Cardio Pad is already connecting patients with heart diseases in the rural areas who lack the strengths, time, contacts, and means to travel to Douala and Yaoundé, the two large cities in the country where they can find the services of a cardiologist. The device solves this problem by taking the heart readings of the patient in remote settings, then ministrant the data via a cell phone to a cardiologist in the urban area who helps to interpret the data. All this happens in less than 20 minutes. The cardiologist will then send prescriptions, as required, to the local clinic. The device can also be the solution to similar problems experienced by heart patients in other parts of Sub-Saharan Africa. Statistics show that almost 50% of adults above 25 years suffer from hypertension, a leading cause of heart disease. Additionally, 20 million Africa in Sub-Saharan region has cardiovascular disease () while an estimated 60 million Africans suffer from abnormally hypertension. A key differentiating factor for the company would be to ensure that its products are accessible with regard to affordability and innovation. This is a very critical requirement, especially for the remote communities in the African, and Asian continents, and South America.
Appropriate routes to international foreign markets
Firms choose to go international for various reasons, although the main objective is company expansion or growth. Selection of market entry mode of a firm into the international market is subject to both internal and external factors and varies from firm to firm. It is important therefore that Himore Medical Equipment gets acquainted with these factors so that it can identify the right market entry strategies and hopefully, avoid making similar mistakes made by other start-up firms in a similar situation (Osland, Taylor & Zou, 2001). In the event that a firm in its initial stage of expansion makes the wrong choices in identifying its mode of entry into the international market, this poses a threat to its current expansion process, as well as future market entries. Internal factors of entry into the international market depend on a firm's internal environment, while external factors depend on the firm's external environment.
Internal factors
One of the internal factors that could affect Himore Medical Equipment's entry into the international market is resources. Considering that the firm is faced with limited financial resources, this could hinder its proposed expansion. It means therefore that the firm cannot adopt a joint venture or subsidiaries to ensure the distribution of its innovative medical devices as these strategies require significant financial resources.
Considering that the shipment of products to these international markets also involves high transportation costs (Hollensen et al., 2014), this could be yet another handicap for the firm's quest to venture into the international market.
External factors
The current size of the market in the target country, along with the anticipated size of the market in the future, shall greatly influence a firm's entry mode. The competitive structure of the target country is also another issue worthy of consideration. Production factors in the target country such as the workforce, quantity, cost, and quality of raw materials, will also affect the mode of entry of a firm, as will the economic infrastructure. The cultural, economic, social, and political issues in the target market will have a significant impact on the choice of market entry mode. However, a key consideration here is government policies and regulations with respect to international business. Issues that Himore Medical Equipment should consider include the target country's gross production, per capita income, as well as interest rates. The firm should also consider the cultural distance in the target market as this will influence its entry. Another external factor that could affect Himore Medical Equipment's quest to enter the international market is the existing government policy regarding foreign investment and exporting of products (Puljeva & Widen 2007).
Based on the foregoing internal and external factors, there are several ways through which Himore Medical Equipment may venture into the international market:
Exporting
This is by far the most convenient, cost-effective, and easiest mode of entry into the international market available to the firm. Already, the firm has been receiving orders for its products from India, among other countries. It could build on this by accepting more orders requested by overseas customers. Exporting would enable the firm to test and develop its international entry plans without huge commitments (Cavusgil, Knight & Riesenberger, 2012). Besides, exporting demands fewer investments and can be tested on a small scale. Moreover, exporting would afford Himore Medical Equipment the privilege of concentrating its production at a single location, institute quality control measures, and realise better economies of scale.
Franchising
This involves giving the franchisee the licence to utilise your manufacturing know-how to manufacture a patented product. In addition, franchising entails granting the franchisee rights to utilise your brand and/or trademark (Gunnarsson, 2011). Franchising is quick and simple to implement, entails minimal business costs, and grants firm access to markets that it would ordinarily not reach owing to government policies. However, the franchisor lacks control over the manufacturing and marketing of the product. The revenues from products sold are also significantly lower than those realised through other entry modes, such as exporting. In the case of Himore Medical Equipment, this is not a viable option for entering the international market at the moment because the company has not fully established itself in its home market (Gunnarsson, 2011). It also needs to build on its technical know-how and expertise in manufacturing its medical devices before considering franchising this to other firms.
Joint ventures
In a joint venture, two or more firms come together with the goal of sharing the management and financial running of a business. This enables them to share capital, control business operations, and reduce risks. However, this mode of entry is characterised by conflicts of interest between the various parties involved on such diverse issues as amounts invested, marketing strategy, and profit sharing.
Conclusion
The Cardiopad developed by Arthur Zang under the Himore Medical Equipment flagship is a revolutionary medical innovation device that promises to improve the health and well-being of patients suffering from cardiovascular diseases in remote areas. However, the firm is faced with a financial problem in terms of financing its manufacturing process. One of the most innovative sources of funding available to the firm is crowdfunding, which has gained popularity with start-up firms. There is a huge market for medical device manufactured by Himore Medical Equipment in the South American region due to an increase in the aging population, while Sub-Saharan Africa and Asia represent untapped markets from the firm. In its quest to venture into the international market, the firm will encounter both internal and external factors, including resource constraints of the firm and market size in the target market. However, the most ideal entry mode for Himore Medical Equipment is exporting its products to its international customers.
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