Encompass Technologies Inc International Venture - Research Paper Example

MEMO TO: CEO Encompass Technologies Inc FROM: International business consultant, Encompass Technologies Inc. DATE: April 2, 2013 SUBJECT: Encompass Technologies Inc international venture Market research and analysis shows that in order to increase profits in general, Encompasses Technologies Inc needs to venture into international markets. Focused groups have found that we need to go global in order to expand our target audience and broaden our market share. Going beyond Mexico will allow Encompass Technologies Inc to expand its expertise in its technological area. A global venture will keep us from losing our customers who are looking online for computer services. The venture is meant to offset domestic markets reliance that sometimes limits the company’s profit margin due to an increase in target consumers willing to purchase the products. A venture like this will lead to greater prospects for absence of seasonal fluctuation. The international business strategy process will include: Analysis of company’s strength and weakness for internal growth Financial resources International management and staff Research and development department availability Factory capacity Market saturation both domestic and international (Doyle, 230) Large economy of scales in future Lifespan of the service and products of our company Capacity to compete more favorable with major competitors Cost of hiring labor in foreign countries Rate of economic growth Access to raw materials Analysis of competitors (Douglas, Lemaire & Wind, 238) Establish our competitors in the target countries Read through the competitor’s profile. Find out what threats they pose on Encompass Technologies Inc as an organization Get to know what is our competitor’s main objective Establish the strategies applied by our competitors to earn a market share Are their strategies legit and successful? Establish our competitor’s strengths and weakness What would be the competitors reaction if we change our operations slightly to compete with them Selection of target markets (Keegan, 12) Screen all developing countries Conduct preliminary screening of the identified countries Prospective target countries Estimate the market potentials in the identified countries Stream to high market potential countries Carry an in depth market research on the high market countries (Erramill & Kao, 19). Research overall market Investigate the market share percentages Understand the market competition of the new country Establish how to distribute our products Establishing global manufacturing strategies (Daniel, Radebauch, Sullivan, 211) Supply chains: aligning materials, information and funds from the manufacturer to the client Logistics: to ensure efficiency through planning, implementing and controlling products & services from source to the end-user as required (211). Compatibility (212) Efficiency costs of running the new ventures Dependability- concerns how we can rely on the organization structure after expansion Quality and innovation- establish how to maintain quality and keep with innovations Flexibility- the ease of creating changes Configuration Centralize manufacturing in one country Service the regions specifically with manufacturing facilities Tailor made facilities in each country Coordination Control organization structures Check on Encompass performance measurement systems Encompass verification of strategies Control (213) Total quality management Six sigma Zero defects Supplier networks (214) Global sourcing Searching for raw materials for computer hardware and other components Assembling of parts in the foreign countries Sale of product in the new country Sourcing configuration –Major (Beamish, 17) Vertical integration Outsource via other industries in current company Shipping from closest country The make or buy decision Supplier relation The purchasing function Selection of market entry (Cavusgil, 27) Direct export – Local manufacturing and full assembling in Mexico Contract with Foreign party- product licensing to home country Investment in foreign establishment- Establishing foreign manufacturing plant Wholly owned Encompass technologies Inc Launch a take-over Set a new organization from ground Joint venture-this involves merging Degree of controlling the influencing factors (Cavusgil,28) Host and home market features Product-market features The foreign venture on computer services Cultural factors of the new country Global corporate objectives Bargaining power in relation to foreign government The relationship between home country and foreign country Global industry structure Commitment and level of risk- this is to identify any unforeseen risks The availability of skilled labor in line with computer technology Encompass Technologies Inc strengths Our vast resources Experienced workforce Unique business objectives Global efficiency and flexibility Flexibility ownership in a foreign country Rate of return of our investment Marketing strategy (Barker & Kaynak, 27) Analysis stage Drawing the market situation in the target countries Conducting Encompass marketing audit on all those countries Environmental analysis- Economic, political and social environment SWOT analysis- Going through the strength, weakness, opportunities and threats of the target country. Market planning- Plan definition stage Setting our objectives (Beamish, 29) The objectives shall be clear and unambiguous They will be measurable in terms of sales volume They will be in line with Encompass current objectives Outlining possible strategies to use in our venture Implementation stage- Transforming the plan into action This is where Encompass designs an action program Appropriate action designing answers the question what needs to be done Schedule timing to covers the question what time Clear job definition answer who is going to do what Coming up with an estimate will answer how much will it cost We shall draw our market mix (29) Price of the products and services Promotion activities such as campaigns, media advertisements, billboards and internet marketing Place- country location Distribution of products The design process fit for the target country. Physical evidence Evaluation and monitoring stage (Ayal & Zif, 85) Planning commencement of the launch Quality assessment of the products and services offered Conduct performance analysis Monitoring the targets against rate of performance Contingency planning Place control techniques Drawing the venture’s marketing budget Comprehensive and realistic budget Monitor the key drivers of the venture Involve the board for final decision Revise the budget according to the approved amount Organization adjustment based on assessment –This is in case of any project changes Communicate with the stakeholders involved Identify the initial problem at an early stage Track the project process from initial stage to launch of the new venture Adjust Encompass project schedule and account for changes We shall adjust project scope where appropriate Document the outcome after the adjustment The decision to venture into new markets must be taken with caution considering the many hurdles of setting up in a new environment. But because Encompass has reached a phase of growth it can start the development of international business. Good communication will help us plan and come up with ideal strategies on how to enter new markets. Market globalization is to our advantage because more and more people internationally are demanding for computer products and services. The environmental analysis will assist us identify the opportunities our organization has and we can use our main strength product quality and fair pricing to acquire a broad market share. While our competitors may be ahead of us in penetrating the market out selection criteria chosen will assist us identify the gap-an untapped market niche -whatever the country. Thanks to our R&D team and technology we have adequate information on our target market and we can start planning our marketing strategy. The marketing mix will rely heavily on how much we are ready to put in foreign markets. The monitoring team that will follow performance tests before actually venturing into the markets can cover uncertainties. If Encompass focuses its energy now in venturing into international markets it will acquire rapid response because there is ready market in the developing countries. These countries are embracing technology at a high rate creating high demand for computer services. The creativity of this company has placed it to the top and by venturing into international markets Encompass will increase its profit margin as it broadens its market share. Yours faitfully Works cited Ayal, I. and Zif, J. Market expansion strategies in multinational marketing. Journal of Marketing, Vol. 43, pp. 84-94, 1979. Barker, S. and Kaynak, E. An empirical investigation of the differences between initiating and continuing exporters''. European Journal of Marketing, 26 (3), pp. 27-36, 1992. Beamish, P.W. Multinational Joint Ventures in Developing Countries. London: Routledge.17, 1998. Beamish, P.W. The characteristics of joint ventures in the People's Republic of China'', Journal of International Marketing. Vol. 1 No. 2, pp. 29-48, 1999. Cavusgil, S.T. Guidelines for export market research''. Business Horizons. November-December, pp. 27-33, 1985. Daniel, J., Radebaugh, L., & Sullivan, D. International business environments and operations (14th Ed.). London: Pearson. 210-217, 2012. Douglas, S.P., Lemaire, P. and Wind, Y. Selection of global target markets: a decision-theoretic approach'', Proceedings of the XXII Esomar Congress, France, September, pp. 237-51, 1972. Doyle, P. and Gildengil, Z.B. A strategic approach to international market selection. Proceedings of the American Marketing Association, AMA, Chicago, IL, pp. 230-34, 1977. Erramilli, M.K. and Rao, C.P. Service firms' international entry mode choice: a modified transaction-cost analysis approach. Journal of Marketing, Vol. 57, pp. 19-38, 1993. Keegan, W.J. Global Marketing Management, 5th ed. Englewood Cliffs: Prentice-Hall. 11-15, 1995. Read More