Reference no: EM133045812

Case study: Everything is Easy with FinSuite:

Accounting for International Markets: FinSuite's Venture Overseas

FinSuite has been developing financial and tax preparation software and providing services for businesses and personal customers for over twenty years in New Zealand. FinSuite has several products and services that have done well, and currently has an 85 percent market share in New Zealand. Its most popular products are EasyAccounts and EasyPay. EasyAccounts is desktop software that allows customers to pay their employees, track inventory, manage invoices, revenue and expense accounts, and much more. Businesses and accountants can enter transaction data into the software program. The target markets for EasyAccounts are accountants and owners of small- to medium-sized businesses. The online version of EasyAccounts has introduced a year ago and can be synchronized with desktop software and mobile applications. EasyAccounts Online is cloud accounting software that allows users to manage their accounts the same way the desktop version would, anywhere there is internet connectivity. The revenues from EasyAccounts Online have been staggering, with higher profit margins for FinSuite compared to the desktop version of EasyAccounts. Users pay a monthly fee for online access and generally pay more for the online version compared to the one-off fee to purchase the EasyAccounts software. FinSuite's EasyPay is a card reader that works with a business owner's smartphone, allowing its users to accept credit card payments from their customers anywhere and anytime. There is no need to be connected by a physical electrical wire or electronic cable. The credit card reader plugs into the audio jack of a smartphone or tablet; the credit card data is never stored on the device. To use EasyPay, users must sign up online for a merchant account. 

The Big Plan:

Vladimir Derwin is the CEO of FinSuite. He and his executive team reviewed their international sales and marketing plan for entry into Asia, Europe, Australia, and the Caribbean. The following are some key points from the marketing plan:

• Launch simultaneously in the following countries between January and March: Japan, China, India, Mexico, Jamaica, Barbados, Australia, and the U.K.

• Focus on two-segmented target markets: businesses with fewer than one hundred employees and accountants who offer services to small- to medium-sized businesses.
• Translate the content of the software into the appropriate international languages of the markets. Other elements of the software would remain the same.
• Start with shipping software and card readers to international markets and then offer the online component in approximately two to three years, after the market is used to the desktop product. Introduce EasyAccounts Online with subscription-based pricing for standard and premium packages.

Marketing mix:

Sell the standard EasyAccounts software package at the foreign exchange equivalent to NZD 350 plus the cost of shipping, and EasyPay at the foreign exchange equivalent to NZD 9.99 per month. o Promotion: Use referrals and testimonials from customers in New Zealand. o Public Relations: Organize local and international press launches at the head office in each country. Host free cocktail evenings to key potential customers and organizations. Vladimir will personally speak about the success of FinSuite's products and services in New Zealand and get the potential customers excited about having the same success in their countries. o Advertising: Advertise in newspapers and accounting associations' trade magazines. Create a strong social media presence.

SWOT summary:

Strengths: Strong research and development; established market position, brand name, and market share in New Zealand. o Weakness: Lacks global presence. o Opportunities: A large number of small businesses worldwide; a growing need for business owners to accept payment anywhere; high mobile device users globally. o Threats: Increased cloud-based competitors; slow worldwide economy; business owners in developing countries accustomed to using Excel to manage accounts or using accountants to provide services rather than using the software.

• Sales forecast: Contribution margin 78 percent.
• Sales channels: Online sales, retail sales and direct sales. There will be a company office in each country, staffed with an IT support team and a sales team for direct sales to accountants and business owners.

The Launch and Beyond

FinSuite completes its launch of EasyAccounts and EasyPay as planned in all countries. Vladimir follows the sales closely. There are high expectations for the growth of FinSuite's products. The market size for accounting software is growing in Japan, China, India, Mexico, Jamaica, Barbados, Australia, and the U.K., but FinSuite did not see its market share grow. FinSuite experienced low sales in all countries except Australia, and this generated negative media reports. FinSuite was accused of not developing products the customers wanted. In addition, there have been reports of software piracy in several countries. This problem was compounded by the barriers the company faced when complying with each country's international trade restrictions. Also, it was time-consuming to ship all the software products, and providing the software updates to customers was turning out to be costly. Each country had its individual setbacks, too. For example, in one country, high traffic congestion meant that business owners had to travel back and forth between their customers and their businesses to provide invoices and review accounts; even though the desktop software provided a solution, its lack of portability meant no quick and convenient access. Another country had a reputation for having high credit card fraud, so when some business owners implemented the EasyPay system, their customers were hesitant to use it knowing that the owner's smartphone was used to "charge" their card. Another country saw low sales of EasyPay as credit cards were not used by the majority of the population. Vladimir realized that FinSuite needed to learn more about the global market, just as it had done for its New Zealand market. FinSuite needed to know things such as who the different types of users were, what the specific, local accounting processes were, and what was expected from the accounting software.

Three Ways to Fix the Problem

Vladimir and the executive team became deadlocked on how to proceed. Some executives wanted to immediately pull the desktop software from all international markets and pull out from all international expansion plans for the next few years. Others wanted to immediately adapt the online version of EasyAccounts to make it available in all the countries where they launched. This meant the R&D team would have to take a few weeks to focus on making the cloud-based online program customizable, so users could select the functions they needed and customize languages, rates, adjustments and even the look of the offerings to suit their needs. The general manager of the Global Business Division, Chuck Thompson, wanted to develop merchant services for the countries instead. Vladimir thanked everyone for their ideas. He considered things such as internet connection issues in some of the countries and the mistrust some users have with storing data on the Internet. He made a decision and called a meeting to announce his plans

Question:

Which option or combination of options should FinSuite take to fix its international expansion problem? Provide an explanation for your choice and suggestions to implement them.