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Rectorseal in India - Research Paper Example

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This write up is an analytical paper focusing on the Rectorseal Company that is considering spreading its operations beyond the American market. In this endeavor, the company needs to analyze the effectiveness of its products in the foreign market. …
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Rectorseal in India
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?Rectorseal in India Appropriate Strategies Companies venture into the international market with various aims and objectives. Expanding the market for the company’s products and gaining international recognition are obvious reasons why businesses engage in international businesses. Businesses however venture into the international market with specific objectives and intention. From this relation Rectorseal has its specific motives of venturing into the international market. Firstly, Rectorseal has succeeded in the marketing of competent products in the US market. This implies that the company looked forward towards a success in the international market. Anticipation of success and increased revenue for the international market was the first reason that led Rectorseal to venture into the international market. Rectorseal Company produces a variety of chemical products such as sealants and adhesives. The company is also involved in the production of variety of equipments for domestic and industrial usage. This implies that the company requires a wider variety of raw materials and expertise. The step towards international market is a positive step for the company since it will enable the company to establish additional suppliers. This will ensure that the company does not suffer from the high power of suppliers that currently characterize the industry. Rectoseal Company has been existence for the last 75 years. The company has achieved a lot of success in the production and marketing of its high quality products. The company produces a wide range of products for both industrial and domestic uses. The company has also enjoyed a lot of support from local trade’s men who form a greater percentage of its consumers. The company deals with the production of firefighting equipment and chemicals, air conditioning and refrigeration equipment, cleaning agents, plumbing products, soldering products and sealants (Bloomberg web). The company considers sealants as its main product and throughout the 75 year of operation, the company has produced the product successfully. This does not imply that the company has not achieved success in the production and marketing of the other stated products. The success of the company can be attributed to its dedicated and skilled team of employees. Throughout the 75 years of operation, Rectorseal has attracted and retained high caliber employees from all field and professionals. This can be attributed to a good working environment in the company and an attractive payment package for the staff. The company has maintained between 100 and 249 employees who have helped the company to reach its current position (Bloomberg web). Due to its expansion needs, the company considers hiring its staff from a varied background. Since its formation, the company has always given equal employment opportunity to all people regardless of their nationality or race. Existence of highly dedicated team of employees and quality products has enabled the company to have a high degree of control on both the domestic and international market. Currently the company’s annual revenue stands at 50 million US dollars (Bloomberg web). This is high a revenue compared to the duration that the company has been in operation and diversification of its products. This high revenue can be attributed to high sale that the company expects in every financial year. Although the company has always tried to maintain a balanced sale from all its products, Sealant products have proved to have a good sale for the company. Sealant products account for nearly 50% of the company’s annual sale (Bloomberg web). This sale pattern is reflected in both international and domestic market where the company markets its products. Due to its success in the regional and domestic Rectorseal Company hopes to achieve similar success in the international market. The three strategies are the most appropriate for Rectorseal Company in its international expansion. This does not nullify the existence of other useful strategies that the company can apply but it is based on how the strategy is useful to the company. Theses strategies are the most appropriate to the company since they consider the immediate needs of the company as well as the future expectations of the company. The strategies are also considerate of the company’s products and the possible risk that the company might get from increased diversification of its products. The strategies are also the most appropriate to the company since they create a difference in the operation of the company as compared to the operations of rival companies. This difference gives the company competitive advantage over its rivals and it is an important part of achieving successful business. Currently the company is considering venturing in to the Indian market as part of its international expansion. Industrialization started in Europe however, European industry are losing their ground to American and Asian industry. Due to this trend Rectorseal, consider venturing into the Indian market as an opportunity to venture the European market. The company also hopes to take over from the declining companies with the anticipation of controlling the entire European market. The company therefore considers India as an appropriate central ground to launch its products and competition strategies into the European market. The company is also concerned with the rate at which the Chinese products and company are venturing into the American market. Venturing into the market is therefore an important strategy to ensure that the competitor of the company do not gain ground in the American market. This is an important step since European market forms the main market for the company’s products. Motives for international expansion are necessitated by international expansion strategies. International expansion strategies are strategies that companies with global ambition apply to expand their businesses. Precisely the strategies refer to plan or approaches taken by the companies in order to realize a successful venture into the international market. Companies choose their international strategy according to its suitability in the company and the capabilities of the company to implement the strategy. Setting global expansion, as an ambition is the first strategy that Rectorseal should consider applying in implementing its international plans. The company should therefore compare its current revenues and the revenue it expects after a certain period. It is obvious that currently the company’s annual revenue is below the projected revenue. This argument applies to other important aspects of the company such as market and international recognition and reputation. Considering this factor the company should consider international expansion as an ambition. This will enable the company to develop a timeframe and resources to achieve the objectives. This plan and resources constitute an international expansion strategy that is driven by ambitions. Chinese and Indian companies producing similar products have proved to be a major threat to the company both in the domestic and international market. In addition, the companies have been able to penetrate the American market due to the nature of their products. Although most of these companies sell substandard products they have successfully blinded the consumer with the low prices for their products. This move by the competitors not only threatens the company’s market but it also affects the credibility of the company’s products. Rectorseal therefore consider venturing into the international market as a strategy to control competitors and to maintain the reputation of its products. Venturing the international market will enable Rectorseal to control its competitors from their home countries. With its high quality products, the company is assured of success in the international market. Going multilingual is the second international expansion strategy applied by most companies. This indicates the diversification that a company receives from venturing into the international market. This strategy is analogous to the existence of diversity among people that is characterized by the existence of different languages. Going multilingual is an appropriate strategy that Rectorseal should consider in its international expansion. Using this strategy the company would be able to realize a diversification in its products as well as its operation. For the company to use this strategy it needs to establish marketing base for its products in each of the target location or country. After establishing market, bases in each of the targeted market the company should then delegate marketing representative to handle each of the market. Considering the Indian market as the targeted market Rectoseal should establish several marketing base in the country before delegating appropriate individuals to handle marketing operations in the country. Preferably, the company should consider hiring market representatives who have experiences in the Indian market. This will enable the company to realize its sales target in the foreign market. Focus narrow and deep is the third international marketing strategy that has contributed to success in most companies in their international venture. This strategy would work perfectly for the selected company considering the level of diversification of its products. According to logic, a business can secure its position in any market by increasing the variety of its product. This implication hold in most cases however, the method comes with a cost. The method therefore is not applicable in most business with intentions of joining the foreign market. Focusing narrow and deep is a strategy that nullifies the diversification strategy. According to the strategy, a business should consider expanding its customer base instead of increasing the number of products that it produces. The implication of this strategy is analogous to application of specialization and division of labor in business. A business that applies this strategy therefore stands a chance to achieve benefits that are similar to the benefits that a business acquires from specialization. This strategy will also work perfectly in the Indian market considering that the company has more than enough products to supply to the customers. Rectorseal should therefore venture into the international market with the mentality of increasing the number of its customer while maintaining the diversity of its products. Customers are an important part of any business. Businesses that are established with the aim of creating satisfaction in customers are successful businesses. Customers are not always at the disposal of business and sometimes a business needs to go after the customers. Venturing in the international market is a common method that businesses apply to reach their customers. Attached to this method is a strategy referred to as following the customers. Through this strategy, a business source or establishes the location of its customers in a foreign country and then establish a market next to the customer. This strategy would be appropriate for our company in its ambition to acquire a niche in the international market. Brief Overview The Asian market particularly the Indian market is an attractive market to the company. The attractiveness of this market is necessitated by the availability of a ready market for the company’s products. The market is also a liberalized market since it lacks centralized buyers. Apart from the company, will also benefits from the developed infrastructures in the country. India has a good transport and communication networks that will enable the company to create a good linkage with its customers. India has also has a free market and this will enable the company to penetrate the new market with ease. The diversity of products and suppliers in the Asian market is the main factor that contributes to its liberalized nature. Thorough Analysis of Rectoseal Market Asia and in particular India has well developed economy and this explain the existence of increased business activities in the region. The existence of a well-developed financial sector also implies the economic status of the target market. With its good economy and high population density, Indian people have a high purchasing power and therefore our company should expect good business. The good economy and flourishing financial sector has resulted from the political stability that the country has experienced since it gained independence from the British. Apart from the major revolutions that took place in the eighteenth century, Asia has experienced a stable economy and this has resulted into low inflation rates. Although the recent economic crises had an effect in the country, the country’s economy is at a recession stage and hence our company will have an attractive market. Indian is a diverse country, this factor results directly from the existence of people of different ethnicity and background in the country. The level of education and existence of cultural diversity also contributes to the diversity of the Indian society. Currently the country has a population of about 1.23 billion people majority of them living in rural areas. Due the high standards of living and improved medical care, the country has a large population growth rate and fertility. For our company to penetrate the market effectively it needs to conduct an analysis of the population to determine the effectiveness of its products in the market and the people’s attitude towards an American company and products. The company also needs to determine an effective method of assigning its roles to the existing American employees and potential employees from the Indian community. The Hofstede cultural dimension model will serve as an appropriate tool for this analysis. Understanding the cultural background of people in a certain country is an important tool that is applied to establish marketing strategies. The culture of the people in a certain society is very important since it determines the strategies that business needs to apply when marketing their products. This implies that our company needs to consider the different cultures of the proposed Indian and American employees according to Hofstede’s cultural dimensions. The power of distance is the first important factor for the company to consider when hiring its employees and introducing its products in the Indian market. The Indian culture promotes high power of distance since its society values the distance between the superiors and subordinates in an organization. On the other hand, the American society supports equality among all workers in an organization regardless of the role they play. The Indian society is more conservative as compared to the American society. On the other hand, American society advocated for independence of thoughts across the different structures of its population. The new business therefore needed to consider this factor in order to excel in the market. The next important dimension that was found to be a major determinant between the Indian and American society is individualism. The analysis proved that the American society has a high level of individualism while the Indian society has medium level of individualism. The high scores of individualism in the American society indicate that, the society level of integration is above that of India. The Indian society has a culture that values and promotes capitalism and therefore the company needs to consider the different types of employees and their suitability for the different posts. The analysis also established that the Indian people preferred integration as compared to the American society. From the analysis, both the Indian and American society will work, better as individual and therefore Rectorseal should consider having more individual positions. The third important dimension in the two societies is the power of uncertainty or uncertainty avoidance. Uncertainty avoidance is the degree of how people avoid uncertain situations and this determines their ability to take risks. The analysis established that the American society is highly optimistic compared to the Indian society. The Indian society also prefers working under formal rules in order to avoid uncertainty. The analysis also indicates that both the American and Indian societies have low score of long-term orientations and therefore they will not consider involvement in long-term ventures. A masculine society is a society that is characterized by success and competition while a feminine society is concerned more with quality of life and care for other people’s welfare. From the analysis, the American society has a high score of masculinity as compared to the Indian society. The Indian culture promotes individual thinking and decision-making and therefore the company would perform well with Indian managers. Secondly, the analysis indicates that the American society has a large degree of optimism as compared to the Indian society and therefore the new company needs to have more Americans in marketing positions as compared to Indian staff. Finally, the American society has a high score of masculinity as compared to the Indian society and therefore the proposed company will perform better with Indian workers in departments that require competition among workers. Due to the feminine nature of the Indian society, the new company should consider having Americans workers in managerial positions and Indians as junior staff. The financial system of the host country will be of great interest to the company in the development of an effective marketing strategy. This implies that the company needs to analyze the Indian banking system, currency, accounting policies, and foreign trade policies. The financial sector of a country is an important part of international business since it determines the availability of financial services to a company. The Indian banking systems mainly consist of local banks such as the bank of India as well as international banks. The stability of Indian economy and currency owes attributes to the Indian banking system. Currently India considers the rupee as its main currency although the US dollar is the common currency in international trade. The two currencies are strong currency and this enables the country to be in a better position in international trade. Due to the strength of the Indian currency, exporting goods to the country would be relatively costly to the company and this creates the need to establish production branches in the country. India is a member of the Multilateral Free trade Area and therefore most of its policies on international trade have been developed in accordance to the regional policies. The trade block was established with the sole aim or reviving the Asian industrial sector. This implies that the policies restrict entry of foreign companies and competitors. Our company should therefore be ready to face the implications of unattractive and tight foreign policies. Considering the nature of the market, foreign trade policies of the country and the distance between the target market and the mother country our company should consider having a functional organizational structure. This structure identifies each portion of the organization according to its role or duty in the organization. According to this structure, our company will perform better if it has departments that deal with its different operations. Firstly, our company should have a marketing department, which should be situated in the host country. A sales department will implement the objectives of the marketing department. A production department will also be a part of the organization and it will be responsible for producing the company’s commodities. These departments will work together to realize the goals and objectives of the company. Conclusion Rectorseal Company is considering spreading its operations beyond the American market. In this endeavor, the company needs to analyze the effectiveness of its products in the foreign market. Although the company has achieved a lot of success in the American market, it might face some difficulties in the target market. The need to follow the customer and to diversify its products is the main motives that the company will apply while penetrating the new market. Although the Indian market is a liberalized market, the country is under the Asian policies on international trade. These policies will prove to be an opposing force in the establishment of the new market. Due to the diversity in the Indian society, the company should consider the implications of Hofsted cultural dimension model. This analysis proves that the company would perform better in the foreign market with a functional form of organizational structure. Works Cited Bloomberg. The Rectorseal Corporation. Business week. nd. Web. February 19, 2012. Read More
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