Success and Grit of the Companies - Essay Example

LOGISTICS al Affiliation Section I: Introduction In this day and age, the growth and success of a company is not only measured by the popularity, outlook or feature appeal of the products that the company sells. On the other hand, the success and mettle of a company is pegged on the success it has on the sales front as well. Sales in itself is a complex concept and notion that requires critical and measured approach for the company to realize success and growth. It is important to note and mention that a company must firstly establish its brand and product name in the local market before it could diversify to other markets internally and regionally. This paper will thus consider some of the benefits of the company to establish its self and products in the domestic market first before expanding. From the face value and outright disposition, it is beneficial for the company to have high domestic sales because it gives the company a solid rock in terms of a customer base. Domestic sales give a company the imperative competitive edge since, it form the basis for which the company would consider subsequent growth. Similarly, if the domestic sales are high, the local market or the domestic buyers would be in a position to market the company to other places that is spreading the good word about the company. A domestic sales points would also help the company to reduce the shipment cost, contribute tax to the government and reduce the transport cost. It goes without saying that producing goods or products nearer to the market ensures that the transport cost is relatively reduced and subsequently the prices would also reduce. Chronologically, when the prices reduce, the products would be bought by the customers thus profits would increase. Section II: Decision-Making Criteria To begin with, before the company expands to international fronts, it must gauge the international markets, in terms of the likelihood to make profits. This is to identify if the international markets have any gap where the products of the company may fit in. it may be awkward to expand and construct the company to the international markets yet, there is no gap where the products of the company would fill. Secondly, it is important to consider the tax regime of the international market or the host nation. This is to imply how much they charge foreign companies, and then the company would consider if the tax regime is friendly or not for business set up. Similarly, it would be proper to consider the cultural aspects and behaviors of the international host nation’s citizens.’ This is important so as to identify the spending habits, the cultural perception of the locals about the product the company intends to sell to the international markets. It may counter-productive to expand on the international market yet the host nation may consider the product a luxury or a good of ostentation. Subsequently, it is important for the company to consider the availability of raw products and talent available in the prospective market. If there are no raw materials to be used in production, it would be expensive for instance to ship materials from the United States to Spain or France (Abdul, 2002). If the latter were to be true, then the cost of business would be high thus the business may not realize returns and profits. Thirdly, the prospects of expanding in the new markets ought to be considered. This implies the business environment in that area and whether or not it is friendly enough to enable business to take place within that sphere. This would be to analyze the success or failures of other firms in that country and whether or not the environment is enabling enough to serve as an expansionary avenue. Equally important is the taxation regime and rates that foreign companies are charged while operating in those areas. It questions how friendly the government taxes the foreign firms and if the level of taxation could support investment. It goes without saying that investments is a direct function of interest rates and taxes, thus there exists a positive relationship between tax and investment. It also important to consider the opponents and the business rivals who are present in the foreign market, in terms of their threats relative to entry conditions of the firm. If there are other more successful and established businesses in the same line of business and interest then it would prove problematic to our venture. This stems from the fact that other businesses may increase the cost of entry into the business and market environment therefore make it imprudent for our venture to expand internationally. For instance, such established firms could use their economies of scale and reduce their prices and then entice customers out of our products. The prospect of domestic expansion ought to be valued against the big market in the domestic font. The presence of the local market ought to be sufficient enough to cover and serve the expanded products. The company must have realized growth and expansion and gauged the willingness of the customers to buy from the ABC Company. Section III: Metrics to Assess Success There are several metrics and measures that would gauge the success of the business. To begin with, profits would be a measure and a mark of business success. This would be considered by the increase in the revenue returns that the company would be making at the end any turnover fiscal year. Thus, it would be critical to mention that any gainful business or venture would be a mark of excellence. From the outset or the face value, the question and notion would involve whether or not the business makes money. Profit refers to the surplus that the business makes if the cost of operations is less than the total money realized at the tail end of the transactions. The increase in the customer base is another mark of a business growth and success. It is important to note and mention that a business must grow in all breadths and respects. The number of customers are the measure of how much the profits refer to the company to reaching its market in an effective manner and way (Agarwal & Ramaswami, 1992). It implies that the research and development of the company would have realized an increase in the number of people who believe in the products of the company. Thirdly, employee satisfaction is another benchmark because subsequent growth and expansion of the business would be pegged on the wellness and welfare of the customers. Satisfaction would be measured on how the buyers or the customers would respond to the price levels and changes that the ABC Company effects in the current and subsequent times. Section IV: Non quantitative factors As a subjective matter, it would require the input in terms of mental and situational awareness. This is to say that the philosophy and the mental preparedness of the business are on point. This is to say that the business would have a brand name which would resonate with the market or the population. Secondly, the business would have as a subjective matter, the philosophy of the business would have to be resonating well with the general markets. Thirdly, the products would have to appeal to the emotional wellbeing of the customers. It goes without saying that the welfare or the general responsiveness of the people or the customers towards the products would be based on the likeness. The degree of likelihood of the products would be based on the appeal it has on the customers. This is the reason as to why the philosophy of the product, the brand name and the personal appeal of the product would come in handy in the same respect and line of thought. In principle, there are several factors which are non-quantitative or qualitative in nature which would be beneficial for the growth of the business. The irreducible minimum is that the products would have to be based on the mental situation and position of the products such as how the products of ABC Company appeal to the general market. Section V: Conclusion The CEO must be cognizant and alive to the fact that expanding the business enterprise of ABC Company to other countries may be a costly affair in the short run period of time. This is so because the amount of time it would take for the business to establish it at the overseas market would be considerably long. Similarly, the cultural dispositions of the people in those places would be a huge determinant on how ABC Company would proceed in terms of making profits in the new market destinations (Skjoett, 2000). It is important note and mention that the business would be forced to do a thorough sales and promotions tour before any meaningful business is transacted. For instance, if the culture of the people is not so responsive to the products, then ABC Company would incur a higher cost so as penetrate and win over the hearts of the prospective customers. In brief the CEO should know that expansion to the international markets would mean growth of brand. Secondly, expansion and growth would increase revenue for the firm and thirdly, expansion presents new prospects of mergers and acquisitions of other companies. Lastly, is the tax regime in the prospective country of expansion, specifically how much tax is levied on foreign businesses. If the tax rate is not friendly, the firm may have to reconsider the intention of expanding to those countries because a huge tax means that the overall operation cost would high thus beating the logic of doing business. Section VI: Response for the excel template What was learnt showed that the freight cost are heavily determined or controlled by the distance or the location of the factory to the market. This means that the transportation cost of the business becomes high since the transportation cost plays a huge role or factor in the price of products availed for selling. In some other industries, it would also be critical because the same logistical circumstances apply across all the businesses in the market. For instance, the circumstance phenomenon on the taxation ought to concern each and every line of business that is present in the world. Similarly, all the logistical issues would apply for the mass merchandising companies because the market dynamics are the same for each line of business in operation. It holds that a cooler producing company in a foreign market would be subjected to homogenous tax regime on a foreign land just like any other investment from foreign land. Conclusively, the metrics for the success are same because the market parameters are the same for the different markets. Excel attached The excel shows the different costs of expansion or construction, in widgets, the $1000 is the shipment cost, while 4000, is widget given by the unit volume of a cooler=40.10.10 14000, 24000 and 34000 are the recoupment total of widgets and cost. References Abdul-Muhmin, A. G. (2002). Effects of suppliers marketing program variables on industrial buyers relationship satisfaction and commitment. Journal of Business & Industrial Marketing, 17(7), 637-651. Agarwal, S., & Ramaswami, S. N. (1992). Choice of foreign market entry mode: Impact of ownership, location and internalization factors. Journal of international business studies, 1-27. Skjoett-Larsen, T. (2000). European logistics beyond 2000. International Journal of Physical Distribution & Logistics Management, 30(5), 377-387. Read More