East goes West: Is the US market a possible strategic direction for East Capital?
Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
The aim with this paper is to investigate the US mutual funds market for a large Swedish investment house with a focus on Eastern Europe. The company is interested in offering their funds to US citizens, a client-base they are unable to reach today. We will look into how they are able to practically offer their products and also how a possible strategy can look like based on a model formulated by the Japanese strategy guru, Kenichi Ohmae. He believes that the most important strategic units in a company are the company itself, the customer and the competitors in a model called The Strategic Triangle. In order to create a competitive advantage and formulate a successful strategy, these units must be optimized and interlinked. The SWOT model will be used in order to list the advantaged and disadvantages of the proposed strategy. Both primary and secondary sources have been used in order to find information about the company, the customers, the competitors and an additional section about the securities regulations in the US. The company that we are doing this investigation for is called East Capital, one of the largest investment companies in Sweden that invest only in Eastern Europe. It has a strong focus on being locally present, both domestically and internationally with new office openings around the world. The US pose great potential on the market for East Capital as US citizens often invest in mutual funds with relatively large capital, are often willing to take risks and have a long time horizon on their investments, a profile that match East Capital’s investment philosophy. In addition, there is very little competition on the market for Russia funds with only two daily traded funds with a majority of holdings in Russia. These funds are relatively small in comparison to East Capital which may mean that Americans are still apprehensive of Russia as an investment country. The legal process to register and sell foreign mutual funds is very complex in the US and this is an important step that the company needs to overcome before the products can be publicly offered. After having analyzed the strategic triangle with our findings of the company, the possible customers and the competition in the market, we conclude that East Capital should enter the US market. Since the company must start a completely new company with new products, the historical performance of the Swedish funds may not be used in the US. This also means that the products will not get any ratings in the first three years. We therefore recommend that the market penetration should be gradual. Initially,East Capital should focus on distributing the funds through full-service brokers. Once the funds will get rated, East Capital should take the launch a step further and try to segment the market and distribute more heavily to important customer-groups.
Place, publisher, year, edition, pages
Uppsala: Företagsekonomiska institutionen , 2006. , 54 p.
IdentifiersURN: urn:nbn:se:uu:diva-8641OAI: oai:DiVA.org:uu-8641DiVA: diva2:131797
Wiedersheim –Paul, Finn