Expanding the Business on Foreign Soil - Research Paper Example

?CONTENTS EXECUTIVE SUMMARY 2 INTRODUCTION 3 RESEARCH FINDINGS 4 Finding the case of SONY 5 Analysis 5 Finding 2 – the case of Telefonica 6 Analysis 8 Finding 3 – the case of Mouser Electronics 9 Analysis 10 RECOMMENDATIONS 11 CONCLUSION 12 EXECUTIVE SUMMARY The changing business landscape has resulted in organizations to consider the aspect of expanding outside the national borders. Company G is one such organization that has considered expanding the business geographically. With the introduction of ChargeOn, a special water-resistant charger that charges mobile phones and smartphones completely in 30 minutes, Company G aims to cater the needs of customers in the Canadian consumer electronics market. The purpose of this report was to evaluate the factors that must be considered before expanding the business on foreign soil. To evaluate the factors, the study focused upon taking the scenarios of other electronic organizations that geographically expanded their business without any difficulties. The thorough investigation of similar businesses led to an understanding the organizations must consider opportunities and growth prospects before expanding outside national borders. This can be clearly witnessed through the expansion of Sony. Not only did Sony focused upon the opportunities, but the company also held the confidence to succeed in the given market conditions. On the other hand, the case of Telefonica revealed that rather than focusing upon the opportunities, the Spanish company focused upon evaluating the similarities within the institutional and cultural characteristics in Latin America. Once it understood that both the countries shared similar characteristics, it expanded internationally despite the several criticisms against the geographic expansion. Lastly, the case of Mouser Electronics revealed that the evaluation of demand must be considered before expanding the business internationally. INTRODUCTION With an objective to consistently meet the demands of the customers, Company G has always remained proactive in providing the customers with electronic appliances that could meet their requirements accurately. With several years of experience in the electronics industry in United States, Company G has ensured its success through its superior quality products. The products offered by the company have significantly enhanced the convenience factor of the customers, while providing the customers with additional value in their lives. To continually remain ahead of the competitors in the electronic market, Company G has always focused upon the offering of its competitors (i.e. the leading companies). This is primarily done to provide the customers with the best possible alternative in the market at comparatively lower cost than others. By assessing the tremendous demand of mobile phone and smartphone chargers in the market, Company G has introduced its own brand by the name of ‘ChargeOn’. The specialty of this charger lies within its convenience and small size. Within just half an hour, ChargeOn can charge any mobile or smartphone battery completely, while ensuring the maximization of battery life to significant level. Similarly, ChargeOn is a special charger that is water resistant. To perfectly meet the demand of the customers in the electronics market, the charger will be available in three ranges; standard USB jack, micro USB jack and mini USB jack. With outstanding opportunity to expand geographically, Company G has selected Canada for the expansion. The objective of this assignment is to evaluate the expansion of the company into Canada’s electronics market. To do so, the cases of other electronic organizations are taken into account to assess the factors that were considered before the expansion. A total of three cases have been evaluated. This has helped in the evaluation of best practices and factors that must be understood to significant level. The assessed information will then be used to help Company G to expand geographically to meet the needs of the customers through innovative electronic products. The thorough research led to significant findings. First, the case of Sony revealed the organizations must consider the experience and the ability to succeed in the international market. Second, the case of Telefonica revealed that understanding the cultural and institutional characteristics is far more important than any other factor. Third, the case of Mouser Electronics implies that identification of demand in the international market is significantly important for organizations that tend to cater the needs of foreign customers. In the end, series of recommendations have been provided that can help the organization to successfully expand and operate outside the national borders. Each recommendation is provided with a clear and concise justification that elaborates the importance and validity of the recommendation. RESEARCH FINDINGS With an outstanding growth in the electronics industry in Canada, technologically driven organizations from all over the world have continuously focused upon expansion strategy as a mean to grow exponentially. This is quite the similar case with Company G that intends to enter the electronics market in Canada to meet the diverse needs of customers to charge their mobile and smartphones completely in shortest-span of time. Despite several similarities in the laws and regulations, organization that intends to cater the needs of the customers outside the national borders must evaluate several factors before expanding. However, failure to do so may result in the loss of business along with the finance, assets and reputation of the organization in the international markets. To evaluate the factors that are taken into account before expanding internationally can be clearly witnessed from the following cases; Finding 1 – the case of SONY The focus upon internationalization has been the core of the business since its inception. With the first mover advantage in the electronics industry, Sony envisioned of becoming a global household brand that could meet the diverse needs of the customers in the local market as well as in the international markets. By continually identifying the opportunities and threats in each region, Sony at last found three regions with the most available opportunity in terms of growth and product diversification. The three distinct regions that presented the organization with a series of opportunities include Europe, Asia and North America. Rather than blindly chasing the objectives, Sony evaluated the region critically to succeed in the region. Before expansion, Sony gathered all the information about the regions to enhance its commitment and confidence. Once satisfied, the company started allocating resources on larger scale to the market so that the opportunity can be capitalized before any other organization (Williams et al., 2012). The evaluation of the region and the ability to succeed in the market were the primary factors that were critically taken into account by the company. Even though, Sony was a well-established and renowned company in the world of electronics, it did not expand outside the national borders until it saw an opportunity. Analysis The case of Sony clearly reflects that expanding the business internationally is quite critical for a business to ensure its existence and survival. The case of Sony is exemplary for Company G. Before the geographical expansion of business, the organization must evaluate the room for the product in the market and the opportunities presented in the market for ChargeOn. This means that before entering the market, the organization must have confidence that ChargeOn will survive and grow into profitable product. Once the company gains enough experience and confidence regarding the success of the product, then it should expand geographically into the Canada’s electronic market. According to a research conducted by Euromonitor International, the electronics industry in Canada experienced significant growth in the year 2011 (Euromonitor, 2012). Smartphones and other portable mobile devices were among the most sold products in the electronics market in Canada. However, the rising competition in the electronics consumer market resulted in the insolvency of many organizations. This indicates that expansion in the electronics market in Canada requires significant amount of competitive advantage in terms of product offering and service over others to significantly enhance the level of profitability. This clearly reflects that understanding the competitive advantage of the product along with the desires of the customers in Canada is critically important for Company G before expansion. If the company expands without gaining relevant information, it might be able to enhance its short-term profit in the electronics industry but will surely fail in long-run. Finding 2 – the case of Telefonica Being the fifth largest telecommunication company in terms of revenue, Telefonica has always focused upon internationalization. Before entering any particular industry on foreign soil, Telefonica paid significant amount of attention on the development of special advantage. With the passage of time, the Spanish company learned to acknowledge the importance of gaining customer’s attention in the foreign industry (O'Brien, 2012). For instance, Telefonica before entering Chile and Argentina focused highly upon understanding the telecommunication industry. The company was aware that missing any crucial information in the understanding of the market can result in the failure of the business along with the huge investment made for the company to flourish successfully. Although, Chile and Argentina shared the same institutional characteristics as well as cultural characteristics with its home company, but the significant amount of reforms in the telecommunication sector were taken into consideration before entering the market. Before entering the market, Telefonica was able to understand and forecast the deregulation of telecommunication sector by privatizing the state-owned telecom organizations in the year 1990. By taking into account all the information gathered, Telefonica entered the Latin America in the year 1992 by purchasing the control of an operator in Chile. It was a huge gamble for the company to enter a market that was already prone to debt crisis, political instability and corruption, but the extensive information and the evaluation of the market resulted in taking of such decision. Additionally, the introduction of Telefonica resulted in several criticisms against the organization in the telecommunication industry for exposing the organization to huge debt crisis and political instability (Lessard, Lucea, & Vives, 2013). This clearly reflects that it is significantly important for organizations that to gain relevant information regarding the industry in which it aims to operate in forthcoming years. In the case of Telefonica, the company not only took this factor into consideration but also the factors of institutional and cultural characteristics that were quite similar in Latin America. This means that the driving factors were similarities in the institutional and cultural characteristics that resulted in the gaining and assessment of information regarding telecommunication sector in Chile. Analysis The case of Telefonica clearly reflects that organizations that intends to cater the needs and wants of customers must clearly understand the institutional and cultural characteristics. Without the clear picture of the foreign industry and the way if performs can hurt the overall performance and productivity of the organization along with its reputation in the international market. By assessing that both Spain and Chile share similar institutional and cultural characteristics, Telefonica immediately focused upon gaining insights regarding the ways through which the needs of the customers could be met along with the industry’s performance. For Company G to enter Canada, it must first gain all the information regarding the similarities in institutional and cultural characteristics. Otherwise, the organization would fail miserably due to significant amount of internal conflicts in the Canadian electronics market. Before considering the geographic expansion, Company G must first evaluate and assess the similarities and dissimilarities among both the United States and Canada. This can be done by assessing the organization’s internal environment along with the shared norms and values that are considered significantly important by the organization against the internal environment of organizations that are currently operating in the Canadian market. In addition, the cultural characteristics should also be taken into consideration if the company aims to become the leader of the consumer electronics market in Canada. This clearly reflects that Company G can only experience the taste of victory through evaluating the similarities among the institutional and cultural characteristics. Therefore, the geographic expansion in the Canada’s electronics market should be on the basis of above mentioned characteristics along with other essential information that can help to achieve greatness. Finding 3 – the case of Mouser Electronics Mouser Electronics, being an award-winning part of Warren Burrett’s Berkshire Hathaway family of companies, has played an essential role in delivery valuable semiconductors and electronic components to both the engineers and buyers. With an ability to provide the customers with 4 million products online from a total of 500 manufacturers, the company is constantly focusing upon enhancing its global footprints. The company serves the demand of customers across the globe i.e. 19 locations worldwide and a total of 7 locations in APAC region. With the geographic expansion taken into consideration by Mouser Electronics, the number of locations will increase from 19 to 20. The destination selected by the company is Penang, Malaysia (Business wire, 2013). The company focuses highly upon meeting the rising demand of the customers towards personalized technical support along with service of design engineers. With an ability to provide the customers with quality products and services, Mouser focuses highly upon delivering the customers with the required products (i.e. newest semiconductors and electronic components) from only the top manufacturers in the world. The factor taken into consideration by Mouser Electronics before entering the Malaysian market is the rising demand of customers and the vision to add global footprint. Before entering the market, Mouser Electronics focused highly upon evaluating the rising demand of buyers and engineers in the electronics market. Once the company evaluated that the Malaysian market has rising demand of the products offered by the company, it seized the opportunity by deciding to enhance its location from 19 to 20 across the globe. Evaluating the demand of the products offered plays an integral role in the success of business in the international world. Without proper evaluation of the demand of customers, an organization can lose significant amount of investment by expanding globally. This means that the evaluation of demand is critically important for organization that aims to cater the needs of customers. Analysis The case of Mouser Electronics clearly indicates that the company focused entirely upon a single factor (i.e. the demand of customers) in the international market. Being a well-established organization and utmost support from the parent company, Mouser was provided with an outstanding opportunity to enhance its performance and productivity by meeting the demands and desires of the engineers and buyers in the Malaysian market. This is not the same case with Company G. Operating on the basis of the personal financing and decision making; the company must understand the demands of the customers. If the company fails to understand the demand of mobile phone and smartphone chargers in the Canadian consumer electronics industry, the organization would have to incur significant amount of loss. By following the footsteps on Mouser Electronics, the company must ensure that there is a demand of mobile phone and smartphone charger in the market. In addition, the company must also select the most desirable location for establishing the business in Canada. Like Mouser Electronics, the company must evaluate the locations available in Canada and must tent to find the best possible location that could help in selling the special chargers. For Company G to assure its success along with the success of newly introduced brand, the company must focus upon evaluating the features required by customers in the market. The product has special competitive features of its own, but the organization would have to suffered huge losses if the customers in the market have low interest towards ChargeOn. This means evaluating the demand must be also taken into consideration before entering the market. RECOMMENDATIONS By witnessing the above case scenarios, it was quite obvious that organizations tend to expand globally with several objectives. All the organizations that expanded globally had certain motives and factors that were regularly considered before taking the decision to expand in the international market (Ghauri, & Cateora, 2010). Although, Company G has experienced utmost dedication and appreciation for providing the customers with the best alternative product at comparatively lower price than others, but expanding globally will provide the organization with an a totally different scenario. To help the organization expand exponentially to increase its performance and productivity, while meeting the demands of the customers in the Canadian consumer electronics market certain recommendations are provided. Following are some of the recommendation that can help in taking the decision to expand outside the national borders of United States to international Canadian border; Before expanding in the consumer electronics market in Canada, Company G must elaborate the laws and regulations of Canada. Although, both the countries share somewhat similar laws and regulations, but being proactive in this case can significantly reduce the impact of the laws and regulations in the forthcoming years. This means that before considering the expansion into Canada, it is pivotal to understand how the laws and regulations are different from that of United States of America. By understanding the laws and regulations prevailing in the country, the company would be able to analyze whether it is legally feasible for the company to introduce such a product in the Canadian market or not. If the company does not analyze these costs initially then it can hurt the company in the long run. The organization must evaluate the demands of the customers in the foreign market before incurring the cost to establish the business in Canada. This means that the organization must evaluate the needs of the customers, while aligning the needs of the customers with the core features and offering of the product. This will help in evaluating how well will the product be appreciated within the consumer electronics market. To significantly enhance the success of ChargeOn in Canada, the organization must tend to gather information regarding the sales of chargers in the electronics market. Understanding the market and the demands and needs of the market is critical for the success of the organization. If the company conducts research and analyze the needs and wants of the consumers in the market, then it would be able to better analyze whether the introduction of the product in Canadian market is feasible or not. Like Telefonica, the company must evaluate the similarities and dissimilarities regarding the institutional and cultural characteristics between United States and Canada. The understanding of such similarities and dissimilarities has become significantly important for organizations before the expansion into foreign country. This information gained through the evaluation will eventually help in understanding the organizational culture along with the operations of organizations currently working in the consumer electronics industry. Different countries have different cultures and a product that may look feasible in one country may not be feasible in another country. Therefore firms need to understand such cultural differences before introducing the product in order to save costs in the long run and make sure that the product is successful (Hollensen, 2007). CONCLUSION Global expansion has become the dream of every single organization, but the achievement of such dream is not as simple as it sound. Several organizations have experienced significant loss in terms of capital and investment. This was the outcome of immediate expansion of business without the consideration of factors that could become barriers in the efficient and effective operations of the organization (Kotabe, & Helsen, 2008). After conducting thorough research, it was evaluated that organizations that aim to expand globally first evaluated the effectiveness of the market along with the demand of similar products. For instance, Mouser Electronics focused entirely on the demand of the products (i.e. semiconductors and electronic components). On the other hand, Telefonica focused entirely on the institutional and cultural similarities among the nations. This means that Company G must also focus upon particular factors that can help in assuring the success of ChargeOn in the Canadian consumer electronics market. These three research findings can provide a guide way to help the organization in order to be successful in the new market and the company can learn the positives and negatives from these findings. To enhance the probability of ChargeOn’s success in the market, certain recommendations were provided. First, the organization must evaluate the laws and regulations of conducting business in the Canadian consumer electronics market. This will eventually help Company G to understand the laws that needs to be complied with in the international market. Second, the evaluation of demand must be considered before entering into the market. This will eventually help in providing the organization with an understanding of the requirement of customers and how can the product meet the requirements effectively and profitably. Third, evaluating the similarities in the institutional and cultural characteristics is critically important for Company G. This will eventually help the company in understanding the culture and organizational structure that must be aligned according to the Canada’s organizational structure and culture to significantly enhance the efficiency, while reducing the internal conflicts. These three recommendations are important for the management to understand as if the management does not consider and understand these important recommendations then it can make the product unsuccessful. For instance, if there is insufficient needs and demands of the product in the new market that the company is planning to introduce, then even if the product may be successful in other markets, it may not be able to engage the consumers in the new market. Similarly, legally if the product is not appropriate in the new market, then it can result in large losses for the company. Therefore it is important to understand the laws and regulations, needs and wants of the market and cultural differences before introducing a product. References Business wire. (2013). Mouser Electronics Continues Global Expansion with New Customer Support Center in Penang, Malaysia. Retrieved October 6, 2013 from http://www.businesswire.com/news/home/20130904006198/en/Mouser-Electronics-Continues-Global-Expansion-Customer-Support Euromonitor. (2012). Consumer Electronics in Canada. Ghauri, P. & Cateora, P. (2010). International Marketing (3rd edition). London: McGrawhill. Hollensen, S. (2007). Global Marketing: A Decision-Oriented Approach (4rd edition). London: Pearson Education  Kotabe, M. & Helsen, K. (2008). Global Marketing Management (4th edition). London: Wiley  Lessard, D., Lucea, R., & Vives, L. (2013). Building Your Company’s Capabilities Through Global Expansion. MIT Sloan Management Review, 54(2), 61-67. O'Brien, K. (2012). Telefonica's 20-Year Gamble Pays Off. The New York Times, Retrieved October 6, 2013 from http://www.nytimes.com/2012/02/27/business/global/telefonicas-20-year-gamble-pays-off.html?pagewanted=all&_r=2& Williams, C., Duncan, N., Thomas, G., Held, C., and Lebendiker, A. (2012). Morita legacy and international strategy at Sony. 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