Expanding in European Union Market - Business Plan Example

Table of Contents Introduction 2 Export from India 2 Advantages 2 Disadvantages 3 Licensing a European Firm 3 Advantages 4 Disadvantages 4 Set Up a Subsidiary 4 Pros 4 Cons 5 Course of Action 5 Other Emerging Markets 5 Expanding in European Union Market Introduction The Indian business has developed a revolutionary manufacturing of a personal computer that shall be providing the equivalent functionalities and shall cost half. With this revolutionary technology the manufacturing cost of the personal computer has been reduced. The business plans to capture the market of European Union and has considered many of the options. In order to expand in the market it is much necessary to evaluate the market conditions and analyze the market. With the analysis of the market done there are three options that the CEO suggested so as to expand in the market. All the three methods have their advantages and the disadvantages as respect to the market. The analysis of the various alternatives that are available to the business in order to expand in the European Market is analyzed and discussed in detail. Along with the expansion in the European Market the decision that should be taken regarding the available options if the business would expand in the other emerging markets are elaborated as well. Export from India The business shall be exporting the personal computers to the European Union and will do business as a trader and manufacturer. It is one of the available options to the business. The export of the end product that is the personal computer shall be exported in the European Union market where the buyer will purchase the product and then they would sale the product in the market. There are various benefits and disadvantages regarding this option, which are elaborated as below. Advantages The cost of the product shall is significantly reduced as much as by fifty percent. The benefit of the reduced cost shall be earned by the business in India. The full benefit of the cost cutting shall be not be entertained to the business in India as India shall be exporting to the European Union market at a reduced cost. With the reduced cost the business shall be able to charge prices that shall be resulting in the increased profit margin. The increased profit margin shall be enjoyed by the business in India. The export from India shall be done to the buyers in the European Market. The buyers in the market are well aware of the market conditions in the market and shall be able to sell the product through their chain. The business from India shall be providing the manufactured personal computers to the buyers and the buyers will be selling them. The task of attracting customer and acquiring the market shall be upon the buyer in the European Market. The Indian business shall only be focusing upon selecting the relative buyers who shall be able to purchase the produced quantity. The marketing cost of selling the product in the market along with the advertisement shall not be bared by the business in India. The reduction in the cost to sell shall increase the profit margins overall. As the business has developed the technique to cut down the cost to the minimum and by exporting it the cost reductions shall be resulting in the increasing margins in the profit of the business. Disadvantages The export of the personal computer to the European Union market shall be much crucial as the business shall be dependent upon the selling ability of the buyer. It is crucial to get the eligible buyer in the European market. The export of the product from India shall be resulting in the less focus in the marketing in the home country i.e. India. In order to search for a legitimate eligible buyer the business shall be incurring cost. The conditions imposed should be satisfied and met. The cost of travelling will increase. In order to export in the European Union market the business should obtain the knowledge of the market. It is crucial to gather the knowledge of the market so as to determine the negotiation terms that are to be discussed with the buyer in the Europe. The market conditions and the prices of the related products should be ascertained by the business in India so as to negotiate upon the beneficial terms. Licensing a European Firm The business in India shall be allowing a European firm to manufacture upon the technology and sale the personal computer in the European market. The European firm shall be paying the licensing fees to the Indian business. Apart from the revenue from the European firm the Indian firm shall be able to continue with the manufacturing of the personal computers and sell them. Advantages When the license is given to the firm in Europe the related costs to the manufacturing of the personal computer shall be bear by the European firm and thus the cost of manufacturing to the Indian firm with reduce significantly. The return upon the developed technology shall be earned by the business in India in terms of license fees. Licensing to the European firm shall increase the effectiveness of the product market as the firm shall be marketing the product and thus shall reduce the costs. With the experts upon the European firm the marketing of the personal computer shall be much effectively done and the potential of the market will be better realized. The product then shall be much more beneficial for the European firm and for the business in India. Disadvantages The transfer of the technology is a much high intensity of risk that the business in India will undertake. The technology shall be transferred to the European firm. Although the firm will be licensed but the leak of the information will result in the leak of the technology. The licensing agreement if done upon the sale of the personal computer then the business in India shall be dependent upon the sale from the European firm upon which the business in India have no control. The quality of the product shall be dependent upon the European firm as to what extend the firm shall be able to effectively utilize the technology so as to provide benefit to the firm and to the business in India. With licensing the Indian business shall be much dependent upon the European firm in various manners. Set Up a Subsidiary The Indian business shall be setting up a subsidiary in the European Union market so as to operate in that market. The subsidiary can be set up by purchasing a running business or by setting up a new operational center. By setting up a subsidiary in European Union market the business shall be facing certain pros and cons, which are elaborated. Pros The subsidiary shall be fully owned by the business and there shall be complete control of the business over the subsidiary in the European Union. With the control over the subsidiary the business shall be able to retain the technology within itself and there are much less chances of infringement of the technology. With the subsidiary the business shall be able to measure the performance of different segments and can evaluate the performance in the different markets. Evaluation of the business operation can be better ascertained by operating a different segment in the different market and hence the exposure of the business will enhance. Cons The European union market must be ascertained and analyzed so as to determine the potential. The subsidiary shall be new to the market and will not be aware of the market conditions. The advertising and the marketing shall be much different than that in India and with lack of information and knowledge the product might not be much successful. The business will need a huge investment so as to set up a subsidiary in the European market and further working capital will be required so as to continue with the operations of the subsidiary. Course of Action The best-suited scenario in current situation is to export the personal computer to the European Union market. The manufacturing of the personal computer shall be done in India and the final product should be exported from India. It is the best option for the business, as the technology will be retained by the business. There shall be no extra capital and working capital required. The business shall be able to realize many profit margins. There shall be much cost cut downs as advertising and marketing costs will be reduced. The experts will do the marketing and the product profitability will be fully utilized. Other Emerging Markets The course of action will change when the company will be expanding to the other emerging markets. The European Union is developed and it shall be difficult there to compete in the market. But in the emerging markets the company should set up the subsidiary so as to retain the control of the manufacturing technology and enhance its operations. The risk of the infringement of the technology shall also be reduced in this case. The emerging markets shall be providing much of the opportunities to the company as the reduced prices shall enable the company to conveniently penetrate in the market. Read More