International Business Strategic Plan Memo - Term Paper Example

International Business Strategic Plan Memo Table of Contents Introduction 2 Steps for Entering into Egypt 2 Recommendations 3 Conclusion 3 References 5 Introduction Preparing a strategic business plan is one of the most important tasks that any organisation needs to perform before entering a foreign market. The primary objective of this international strategic business plan is to provide the details of the steps that are required to be followed by Gordon Composites. In addition to it, the plan also includes possible recommendations, adoption of which is expected to ease the process of attaining its objectives. The plan is prepared in the context of Egypt as we are going to enter this country with the purpose of expanding our business. Steps for Entering into Egypt Several ways are available through which a company can enter a new market. Some of the most common ways are exporting, licensing, direct investment and joint ventures. Each of these ways is discussed here in the context of Gordon Composites and Egypt. Exporting: It is one of the most widely used strategies in which companies only sale their products in the foreign markets. Products are produced only in the home country. It is a cost effective strategy as no production facilities are required to be installed in the target country. All the costs are associated exclusively with the marketing activities. Export mode is the only way of serving a market with minimum risk and high flexibility (Wagner, p. 3). There are two different types of exporting that we can adopt. These are direct and indirect exporting. In case of direct exporting, products reach the end customers through independent distributors. On the other hand, indirect exporting involves a foreign purchaser and/or an export management organisation (Hisrich, p. 198). Gordon Composites has the opportunity to export its products in Egypt. Two of its basic products i.e. bar stock and laminates can be exported through independent distributors. Licensing: Licensing essentially authorizes an organisation in the target nation (foreign market) by using the properties of a licensor. Usually these properties are intangible in nature. Patents, trademarks and production techniques are some of these properties. Such strategy is likely to be an effective one in the context of maximising revenue as the required investment amount is very low. Franchising, a special form of licensing, can also be adopted in the process of entering into a new foreign market. In this strategy “the franchisee runs the business under the franchiser’s trade name” (Klug, p. 39). Our company can enter the Egyptian market in franchisee mode as well. This is expected to be one of the most cost effective and revenue-earning strategies. Joint Ventures: Usually a joint venture is an entity where two or more organisations have their shares in it. Organisations like Gordon Composites can enter Egypt by means of forming joint ventures with some of the local companies that are present in the similar industry. In contrary to the other market entry strategies, forming a joint venture involves significant amount of investment. Moreover, the process of creating a joint venture with the local companies is greatly influenced by the political scenario of the target country. Foreign Direct Investment: Foreign direct investment (FDI) refers to the process by which an organisation of a country (source country) obtains ownership of assets with the objective of controlling production, distribution and various other activities (Moosa, p. 1). FDI involves transfer of resources such as capital, personnel and technology. Direct investment can be made by the means of acquiring an existing establishment or entity. This strategy helps the investing companies to keep control of their operational activities of the target country in their own hands. However, full-fledged operations require high degree of dedication and huge amount of investment in resources. In order to make a strong presence in Egypt, foreign direct investment is recommended as the most useful strategy. Egypt is one such country that always welcomes foreign direct investment as the country considers it as an important tool for economic development. Recommendations We recommend that Gordon Composites should conduct extensive strategic analysis of both its external as well as internal environment. For analysing the internal environment, the company should identify its strengths and weaknesses in order to make more effective decisions prior to entering the market of Egypt. On the other hand, the company should find out potential threats and possible opportunities that are likely to have a significant impact on the future business of the company especially in Egypt. It is very important to have a comprehensive knowledge of the foreign country’s market and environmental condition before entering it. Considering this, we recommend that Gordon Composites should conduct a strategic analysis of the business environment of Egypt prior to investing in the country. Strategic tools like PESTEL should be used. Each and every component i.e. political, economy and social, environment, technology and legal should be thoroughly analysed in order to gain a clear understanding of the Egyptian market. Gordon Composites must analyse the present demand and potential future demand of its products in the Egyptian market. The company should clearly identify its target customers and accordingly position its brand. Moreover, the company should also properly categorize its competitors and their capabilities. Marketing communication will be one of the most important aspects that Gordon Composites should ensure before entering a new market. The company should heavily advertise its products and brand. Pricing will be another crucial factor. It is recommended that Gordon Composites should design its pricing strategies in accordance with the present competitor and market demand. Conclusion This international strategic business plan aims to identify and analyse the ways in which Gordon Composites can enter the Egyptian market. It includes most of the common methods of entering a foreign market. Modes like exporting, licensing, direct investment and joint ventures are properly described in the context of the company. The plan also includes possible recommendations which should be followed in the process of expanding the business in Egypt. References Hisrich, R. D. International Entrepreneurship: Starting, Developing, and Managing a Global Venture. SAGE Publications Inc. 2009 Klug, M. Market Entry Strategies in Eastern Europe in the Context of the European Union: An Empirical Research into German Firms Entering the Polish Market. Springer. 2006 Moosa, I. A. Foreign direct investment: theory, evidence, and practice. Palgrave Macmillan. 2002 Wagner, T. Foreign Market Entry and Culture. GRIN Verlag. 2009 Read More