Possible Turnaround Strategies for the Business - Essay Example

EVALUATE POSSIBLE TURNAROUND STRATEGIES FOR THE BUSINESS Having established the business and run it profitably, the owner must take into consideration that the aim of any established business is to grow. Hence the turnaround strategy must take into consideration that the business has to increase its current operation and expand beyond the current operations. The business has an advantage in that it has an already established local market from where it can expand to other regions. The owner has two strategies in which he can turn the business around. First, he can decide to keep the business local and increase the number of outlets in the local market. This would involve establishing more outlets in the marginal areas to make sure that the business is present to a wide range of customers. This is in line with the marketing strategy in which the more the people knows about your product, the more they are like to buy. With the understanding that his business operation is based on quality product as the explanation, increasing the presence of the business in the local market would help to create a good name and a household brand which can be easily sold to outside world. With the brand now famous in the home country, it would be easy even to partner with the international companies and market the products since they would be acting as ambassadors based on the good name built in the local market. However this would be a wise decision because of the local competition and the possible saturation of the local market. Increase competition or saturation of the local market would make the operation and expansion strategy difficult for the business. According to Audley (1998), the other strategy can through going international at once. This is probably the most efficient way of expanding a local SME to attain international standard. However this would be a tricky move also very involving. It would require proper preparation in terms of capital investment and also in terms of management. Going international for an SME is quite involving but very rewarding in case it is executed accurately. Having seen at the two possible turnaround strategies for the business, let us now look at the requirements that would help in the expansion process. First it would require a huge amount of capital investment. This is needed in for licenses and business premises. Perhaps the most important thing to understand here is that the owner must first become conversant with the international laws governing international business. This is important in order to understand the terms of payment and transfer of money. The owner of the business needs to establish an account to receive all payments depending on the mode of operation. Having a sound financial backing is of crucial importance before venturing into international business as the business requires huge inputs. According to Jennifer (2004), once the owner has established a sound financial backing, he needs to identify countries in which he needs to operate. In line with the furniture business, the owner must consider areas where the business can be lucrative. This is important because entering in a crowded market can lead to losses taking into consideration that the business produces high quality products which many people may not be aware of in the new market. Hence a thorough market research is necessary to establish the status of the market the business is intending to venture before making its move. Market research is very important as it helps to determine the quality of the products sold in the new market, the pricing policies in the new market, major players in the market, and other factors. This also helps to understand the business atmosphere in the new market. After doing a thorough market research and listing the possible investment destination, the business can then take the next step in establishing itself in the intended market. Then one goes to the most important step in setting up of the business. This will require the owner to decide whether the business has to make direct investment in the destination country or it will enter into partnership with the local chains like supermarkets. Each of the strategy has its own advantages and disadvantages. Depending on the business environment in the country and business laws pertaining foreign investors in the country, the business will decide on the mode of operation it will take. According to Karise and Barry (2007), direct investment has an advantage in that the owner will be in control of all the chains established in the country. The owner can sell the products at a price one wants as dictated by the local market. The business can easily expand to any part of the investment country depending on viability of the local markets. However it requires a huge capital outlay in terms of local licenses and acquisition of business premises. The business will operate as a sole local business and hence will be liable to pay all taxes paid by the local business. The business will also incur extra cost of advertisement in order for customers to become aware of its presence. In a crowded market, advertising can become very expensive and that is why we said that the mode of operation in the local market will depend on the market survey conducted. If the market is not very much crowded, the business can venture as sole business since the cost of advertisement as access to more customer will not be high. But if the market is crowded, the business has to think of other possible ways of venturing into the local market. The other way the business can expand in foreign markets is through partnering with other businesses dealing in furniture of other products in the investment country. It is good for the business to vet the financial status of any business before entering into partnership with it. It must be a reputable business in the local market with good sales turnover and s good customer base. The business can enter into partnership with large supermarkets chains who would be marketing furniture on their behalf but which would be at a payment of certain percentage of the sales. The business can also enter into a partnership with local furniture shops and decide on kind of and exchange program in which each business markets each others product in indigenous country. However this does not work most of the time especially if the business is providing high quality products that the partnering company. The business can enter into another deal in which it can acquire a locally existing furniture business and makes it one of its chain outlet. Partnership is an effective way of entering the international market since the business will incur less cost in terms of advertisement. It will enter into an already established market and a customer base. This is one of the most effective ways of reaching a wide market since the business will sell furniture in all the outlets of the partnering business especially if it is a large supermarket chain. On the other hand acquiring a business is an effective way of expanding into local market although the credibility of the business must be thoroughly vetted to establish the view of customers about its products since the business will be identified with the business that it acquires. However partnership has a disadvantage in that the freedom of the business is curtailed since it has to operate according to the operations of the partnering business. Its furniture will only be sold in the areas where the partnering business is operating and it may be limited in terms of pricing policy and other operation. References Audley, P. (1998). Culture or Commerce: Canadian Culture after Free Trade. Canada: Stoddart Pub. Jeniffer, O. (2004). Supply Chains get smarter. University of Michigan Karise, H. and Barry, Q. (2007): SME retailer internationalization: Case study evidence from British retailers; Journal of International Marketing Review, Vol. (23)1: 20-30 Read More