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International diversification - Essay Example

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INTERNATIONAL DIVERSIFICATION Introduction Diversification involves venturing into ne markets or selling new products (Allen and Gorgeon 2007, p.1). This strategy helps to increase profit though this new Market…
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Download file to see previous pages International diversification occurs when a company trade in more than one country and is measure by the number of the countries the company occupy (Hwee 2007, p.17). Firms are always seeking for ways to increase their activities (Moncada-Paterno-Castello at el 2011, P.586). It can be through portfolio diversification, acquisition, Merger or resource investment (Hwee 2007, p.17). In recent ties international diversification has been made easier by Formation of trade organizations and minimized trade barrier allowing the companies to expand internationally (Gaur and Kumar 2009, P.172). A company may choose to diversify internationally despite its size provided it has products that can be used across the boarder. However according to Hwee (2007, p.17) requires huge capital investment due to marketing, restructuring of the management team, research to understand the new market and other investments while the growth may be hindered by other factors such as cultural values, political stability and exchange rates. There is contradicting information on whether diversification is beneficial to a company or not (Marcelo at el 2008). This paper will critically analyze the advantages and disadvantages of a company diversifying internationally. Advantages Growth A company diversifies internationally to new market one such company is the South Korea based Samsung electronics that has intensified its marketing globally and the outcome has been positive. Samsung electronics is a subsidiary of Samsung group and is the leading mobile phone manufacturer after overtaking the Nokia Company. Electronic companies are expanding like any other business to acquire their market share (Jaemin and Chan-Olmsted 2005, P.183) Samsung electronics especially mobile Phones has Increased its market share by export its products internationally as well as manufacturing products which are affordable by low income earners, mid income earners and high income earners. Africa is one of the fastest growing Mobile phone markets with recent study showing Africa as one of the continent with more mobile phone subscribers than landline users. In Fact, analysts estimates that Mobile Phone use in the last five years has been increasing at a rate of 65 percent per year. The growth s associated with the fact that they are the major means of communication, networking and also development (Kreutzer 2009, P.1). The leading Mobile manufactures have tapped into this opportunity by designing products that fits the Africa Market and setting up offices to drive their goals. This is also China is focusing to grow manufacturing its Market in Africa (Brenton and Walkenhorst 2010, P. 577). According to Thinesen (2011), Samsung is leading in the mobile phone Market share with about 25.3 percent of the total market share. Samsung electronics has realized growth in their mobile phone market share in Africa and USA overtaking Nokia in 2012 (Jackson 2012), for the first time in a long period Nokia has been replaced as the leading company. It has intensified its Marketing strategy, increased its investment in new mobile application, and rolled out offices in new territory and their investment has paid of thus the realized growth. Globally, according to international data corporation mobile phone sales grew by 2.4 percent in the third quarter of 2012 with total sales amounting to 444.5 millions units compared to 434.1 ...Download file to see next pagesRead More
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