Expanding Internationally - Assignment Example

Through a related diversification strategy, a company may be able to leverage competence in one market in order to achieve competence and competitiveness in the other markets. Thus, evaluating the list of the company’s products for relatedness among the products yields positive results. The company may employ related diversification using two products; luggage and color televisions. This implies that the other products (writing instruments and miscellaneous plastic and paper tags) fail to qualify as part of related diversification.

As outlined in the definition, related diversification calls for a company’s engagement in different products with regard to the existence of a certain level of connection in operations pertaining to the products selected (Griffin and Pustay, 2010; Neelankavil, 2007). Thus, both luggage and color televisions represent a luxury nature of business operations. This implies that both products are geared towards meeting the client needs of comfort and luxury. On the other hand, writing instruments and miscellaneous plastic and paper tags do not contribute significantly to the creation of a luxury and comfort oriented product.

This, in turn, disqualifies the employment of both products in a luxury oriented line of business. Therefore, in order to employ a related diversification business strategy, the company has to focus on the production and distribution of both color televisions and luggage solutions to local and international market audiences. In a bid to expand internationally, China and South Africa offer a potential opportunity for the company’s business expansion. This is owed to numerous reasons. For instance, both China and South Africa represent a significant share of the company’s revenues (Kyambalesa, 2004).

In addition, both China and South Africa represent one of the most rapidly developing economies in the world and are on course to being significant players in the consumption of certain products in the future. This is owed to the rapid development processes being undertaken in these regions which create numerous job opportunities while increasing cash flow circulation. Thus, the regions represent a rich hub for luxury-oriented businesses such as the businesses undertaken by the company. Therefore, China offers a strategic entry point into the world of technology and color TV production.

On the other hand, South Africa provides the company with the most convenient entry point into the African continent. Being a highly developed country, South Africa has the necessary and conducive infrastructure for effective international business relations. Moreover, the existence of a favorable Chinese-African partnership underlines the convenience of this decision as a strategic and international expansion measure for the company. However, the expansion process of the company will rely on a Foreign Direct Investment (FDI) process as the most convenient mode of entry into other markets.

As a result, the desired FDI strategy for expansion would be acquisition. This is because an acquisition strategy would provide the company with immediate and direct entry into the desired foreign markets (Griffin and Pustay, 2010; Neelankavil, 2007). Moreover, through an acquisition program, the company would be able to oversee operations of the independent subsidiary companies