International Business Strategy of Icebreaker - Case Study Example

Introduction Icebreaker has been a very successful company in New Zealand, UK and Germany, therefore expanding it to China would be a good idea. Jeremy Moon the CEO of Icebreaker thoughts of expanding his business to Chinese market for future expectations is also a good strategy. This is quite a good initiative because once a company goes international, competition increases and hence the need to offer quality services and products is evident. Establishing ones company in a developed country increases their competence and improves on the quality of the products. It is always good to change ones business location as a result of industrialisation. In most cases many firms are moved from countries that are not industrialised to highly industrialised ones in terms of technology, infrastructural developments, jobs, wealth and more consumers. Jeremy Moon has a vision for his firm and that is the reason he thinks of expanding it to Chinese Market. Chinese market is well industrialised with a great deal of consumers, technologically developed and possesses a good market for his products. Industrialised countries experience rapid economic growth which opens an opportunity for one to expand their own business and increase productivity level. This is due to the presence of established markets that provide quality produce and competitive prices. International business strategy is efficiently and effectively matching the strengths of a competitor in relation to the challenges and opportunities found in a certain market environment that is dispersed across borders. International business strategy focuses on getting into foreign market through the use of structured meetings by the top management (Chhabra 1996). Why expand to China Selling in China is a priority in that there is a ready market. Chinese network of fashion distribution was evolving, extensive and willing to experiment with western goods. This was a major advantage to Jeremy Moon where China is an industrialized country with ready consumers, good transport and communication facilities and improved technology. Good transport and communication enhances one to travel easily to the market. Passing of information will also be enhanced by the good communication facilities available in China. The technological advancement will enhance production of quality products and services to the consumers. Good communication, advanced technology and transport facilities speed up growth of business enterprises globally (Gregory & Marilyn 2004). There is globalization of markets in China; as a result there are more and more goods and services offered on large scale. This leads to having many consumers in the markets leading to higher sales. China is one of the most technologically developed countries in the world. Technology plays a part in supporting its economy as they supply cars, electronics, machines and other devices to developing countries. To add to that another reason as to why Jeremy Moon should expand his business into the Chinese market is due to the presence of competition in China. Businesses prevail well in places where there is competition this is because all the producers tend to produce high quality products and services to meet the expectations and needs of the customers. During competition developments occur and one learns and gains from their competitors ideas on how to improve on a certain product or service. Expanding his firm to the Chinese market, Jeremy Moon will face competition which will challenge him to produce quality goods and more production to keep up with his competitors. Furthermore, there are no companies in China making woolen clothes and hence this will be of great importance to Icebreaker. Competitors also help in regulating overpricing; due to the high number of suppliers than the demand, the pricing id favourable as each of the organization is willing to lower its price to obtain more customers than their competitors (Michael, et al 2008). In Chinese the market in big and complex; getting information is very easy due o the advanced forms of communication. In China, it is easy to get enough market information by use of research methods, communication networks, databases, technical improvements and much more important information about the market easily at a very low cost. This information helps in planning ones business and coming up with strategies to improve the business. Jeremy Moon will be in a position to set priorities in terms of financial and time management. Opportunities When getting into international business, principal opportunities and risks ought to prevail in your business. Exploiting and transferring businesses across borders pose merits and demerits to the organisation. Opportunities like reliability prevail. The business becomes reliable due to predisposing factors like good communication and transport services, advanced technology. The customers can rely on the business as it convenient and effective in services. Resources become available as they are provided by external factors (Michael & David 1997). Low labour cost could be another opportunity that could arise. China is a heavily populated country and hence, there is lots of cheap local labour .Industrialised countries posses a lot of local human labour force which makes it cheaper to hire labour services. If Jeremy Moon decides to take his company Icebreaker go to China, he will be in a position to cut on labour cost due to the presence of cheap local labour services form the citizens of China. Opportunity to gain knowledge and technical knowhow and technological experience also comes hand in hand. Due to interaction with foreign investors and other competitors Jeremy Moon will gain knowledge and skills that will assist him in improving and expanding his business. He will also be in chance to learn management skills and know how to mange and run his business. There is also the opportunity to diversify ones business. This may come by the addition of new market where one could sell his goods and services gaining more income and start other endeavors. There is access to raw materials and hence production becomes easy and a fast production. In Chinese markets there is the opportunity of a fast going economy which will help him earn more income as well as expand and improve his business. Fast growing economy is what any business requires to grow and develop (Paul & Adrian 2001). Risks One of the major risk and challenge that will face Jeremy Moon will be the issue of supply china. Because the company will be new in China, getting new supplier who would meet the standards of the company would be a big challenge to Icebreakers. Adapting to the local could also threaten the effectiveness of the business as it would take time fro him to get used to the different setting of the business. Jeremy Moon’s Icebreaker organisation could get a hard time adapting successfully to the requirements of the Chinese market and this may lower his income for quite some time. Other issues like the cultural differences could also pose as a risk Jeremy Moon‘s business. Considering he is going to a market with people from a different culture, he many be face by problems to do with the different cultures like language barrier, their values and beliefs or their customs (Sullivan & Steven 2003). Lack of experimental knowledge could also hinder the founder of Icebreaker’s in excelling in his business transfer to China as he would not be in a position to do research in the market and market his business. This may be attributed to lack of sufficient attention from the market demographic of China. Another probable risk could be resistance from the Chinese community. Jeremy Moon could face opposition from the Chinese people as he is from a different culture and this may affect his business tremendously. Resistance could derail him or de-motivate him to return to his home country. He may be compelled to stay and find the resistance hence end up incurring loses. Jeremy Moon could face downstream knowledge which would interfere with his customers, sales distribution, marketing, and after sale services. Foreign exchange could be another risk to the Jeremy Moon’s company of clothes wear; Icebreakers as he may to be familiar with the trade involved (White 1995). Foreign trade and exchange requires expertise and experience and hence having no experience could pose as a threat to business and may risk loosing finances to the locals. Competition will also be another risk he will have to deal with on arrival to Chinese market. The markets are highly saturated and hence he will have to come up with strategies to help him compete effectively with other foreign traders and also the Chinese traders. Chinese market Chinese market has become the shopping centres in the world. This is due to diversification of products and services. Chinese markets offer everything from electronics to food; as a result, many people have run decide to start their businesses in China. China as a country has the most number of people who provide cheap labour and a market to traders in China both local and foreign (Michael, et al 2008). China markets are examined occasionally to check on developments, surrounding environment, demand, supply, economic trends and major participants in the industry. The Chinese market provides vast business opportunities due to its fast growth in the economic and the availability of a huge market. However, it faces quite a number of challenges starting from insufficient market data, difficulty in finding the right partners lack of access to sales channels unsuitable entry strategy, and cultural diversity. Compared to other market, Chinese market are far much ahead and offer high quality products, services. There is diversity and the prices are favourable to the consumers due to the presence of many suppliers. Internationalisation is the process by which international markets increase involvement of enterprises from other markets across the border. Jeremy Moon believes that the future of his company lies in the Chinese market. Due to the increased internationalization, it might urn out to be great but Psychic distance may pose as a threat to his achievements. Psychic distance can be simply defined a s the distance between foreign market and home market which comes as a result of perceptions people holds for self and others due to cultural differences (Michael & David 1997). Psychic distance and internationalisation Psychic distance can be viewed in four perspectives; geographic, cultural, administrative, and economic. They all have different types of effect in the market, industries and internationalisation in different ways. Distance may effect internationalisation in that it may lead to a trader being intimidated and hence quit. There is a relationship between performance and perceptions hold by people to others and to self too. By Jeremy Moon taking his business to from to China, it may be affected due to the perception the Chinese people hold about the Americans. This may lead to poor performance and at times investors are forced to go back to their home country as a result of hostility from the hosting country. Lack of adaption is another factor associated with psychic distance (White 1995). A trader like Jeremy Moon may take his business is active wear to Chinese market and lack the ability to coup with the environment and the people. Adaption may be a problem due to the cultural differences between the Chinese and Jeremy Moon. Lack of adaption negatively affects the performance of international market too and hence affecting internationalization. Recommendations and Conclusion Entering a large developing nation like China on a large scale basis could be associated with high risk levels. On the other hand, the possible long-term rewards linked with such a move are great. China being the most technologically advanced country in the world, Jeremy Moon should not be hesitant to take his business to the Chinese market. He should however come up with strategies and policies to guide him on how he will pull it through (Michael, et al 2008). Management international management strategies will be of great help in this situation. He will require skills and qualities to help him deal with confusing situations.he have to come up with way to solve strategic tension that confront him in his business. He will require implementation of the strategies, which will help link him with the customers and obtain benefits for his business. International business strategy is essential for any manager willing to pursue his future carrier in a foreign country or market. Jeremy Moon has aimed the future of his company Icebreakers active wear into the Chinese market. A lot has to be done for him to succeed in Chinese market. All organizations must have long term and short term goals and ambitions which motivate the founders to work hard and attain their dreams (Gregory & Marilyn 2004). Jeremy must apply the five views of a strategy; having a vision, a plan to execute the vision, the pattern to execute the plan, the tactic to come up with the pattern and the position held while working toward attaining their goal and objective. However Jeremy has to do research on the market, analyse the customers, the competitors, the suppliers and the environmental conditions of the area before he takes Icebreaker to Chinese market. All this will be necessary as it help him in analyzing the merits and the demerits of taking his business to the Chinese market from the United States of America. References Chhabra, S 1996, "Marketing adaptations by American multinational corporations in South America": Journal of Global Marketing, vol 9(4), pp. 57-74. Gregory, GD & Marilyn, LT 2004, Strategic management: Creating Competitive Advantages, McGraw Hill Book Co. Michael, AH, Duane, I & Robert, EH 2008, Strategic management: Competitiveness and globalization: concepts & cases, Cengage Learning. Michael, JS & David, WG 1997, Strategic management: total quality and global competition Blackwell business Wiley-Blackwell. Paul, J & Adrian, W 2001, Strategic management: a fresh approach to developing skills, knowledge and creativity Kogan Page Series, Kogan Page Publishers. Sullivan, A & Steven, MS 2003, Economics: Principles in action, Upper Saddle River, New Jersey, Pearson Prentice Hall. White, A1995, Cross-border retailing Leaders, losers and prospects, London: Pearson Professional. Read More