Although LIDS can use all the four exporting strategies, the one that best suits it is merger and acquisition. LIDS can successfully export its products to markets in foreign countries through forming a merger, which should be followed by an acquisition. It can begin by entering the target market through mergers with domestic companies to create new entities. Once the merger process is successful, LIDS should then strike deals with the target domestic companies to allow it to run them. That should see the firm take over the operations of the relevant domestic companies in its target foreign market.
Merger and acquisition is the most suitable exporting strategy for LIDS due to the great benefits it would bring to the company if adopted. Firstly, the company would have an easy and quick entry into the foreign market of interest since the domestic companies it intends to take over already have a well-established distribution network and product line in the countries. Secondly, LIDS would overcome entry barriers and restrictions on fundamental aspects such as materials supply, skills, patents, and technology, which usually delay the entry process into foreign markets. Lastly, the strategy would help the firm remain ahead of the competition by lowering the number of companies in the industry.
Although the strategy can bring a lot of benefits to LIDS, it needs to take note of a few shortcomings associated with this option. Firstly, the strategy lacks the necessary due diligence for entering new markets, which may affect LIDS’ successful entry into its target foreign markets. Secondly, this option is a significant financial investment with high political and market risks. However, these faults can be minimized through conducting intens...
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...nd expand their markets. The main advantages of this strategy are tax subsidies and reduction of the price escalation risks associated with customs, duties, and transportation costs. The main disadvantage of this option is the slow entry into foreign markets.
Companies can also export their products to foreign countries through mergers and acquisitions. A merger is a strategy in which the exporter amalgamates with a domestic company in the foreign country and establishes a new company. In the case of acquisition, the exporter takes over the operations of one domestic company in the targeted foreign company. The main advantages of the merger and acquisition strategy are quick penetration into the foreign market and preventing the entry of new competitors. The main drawbacks of this strategy are the high political and market risks the exporting company is exposed to.
The facts are that that there are advantages and disadvantages of CNS going global with the product. The advantages are that CNS can attempt to increase its market share and not have to rely on only domestic dollars, partnerships can begin to develop between local suppliers, and they can avoid costs of domestic licensing. The disadvantages are that there are local customs that need to be considered, the lack of name recognition of the brand, there may be stronger global competition, the international company may be used to different marketing, and there may be different trade regulations. The decision for CNS to go global takes careful analysis and an international strategy.
• A more competitive, efficient and profitable business with less competition in the domestic markets.
Breaking into new markets helps the company grow and brings in new customers, which leads to higher profit margins.
By building international reach; Wal-Mart would gain economies of scale, which increase the ability to reduce prices to its customers. Furthermore, global suppliers would help the company facilitate the entry process into new markets by having the “wisdom and support” of an established presence in the market who know customer trends and market needs and specifications. Not to forget the advantage of e-commerce in breaking the international barriers and increasing sales, which is already happening in Mexico through kiosks, where consumers order online and pay/pick at the
One of the main costs is to manufacture their products. A major reason the companies are moving manufacturing plants to Asia and South America is to lower manufacturing cost. This will lower the cost for the customer and keep each company competitive and allow them to keep a high margin. Another cost is the inventory cost for each company. Each company needs major capital to store their broad catalog of products. This is especially true for Fastenal because one of their niches is time of delivery. Since Fastenal has more distribution plants we as a company are able to get a customer an order in a shorter period of time. The problem for both companies is since the catalog is so broad many products end up staying in inventory for too long raising inventory costs. Also another cost is product development and management. Each company has many products that need to be developed and the customer seems to always want something else. Both companies spend capital to satisfy their customer’s product needs and each company needs to manage product
...choices for executives, and gaining rapport with local suppliers, the corporation stands a good chance of achieving success in their foreign expansion.
... 70% of their volume produced outside of their home country. Imports pose a threat to the market share that companies like Anheuser-Busch, Miller, and Coors have in the domestic market. It should be the domestic industry’s top priority to try to merge into the overseas markets. There will be many growth opportunities lost and the potential for other foreign companies to take much of the control of the global market share if the major domestic industry’s players do not merge into these markets.
All research fully carried out on Entry nodes on the long run remain limited to large manufacturing firms. The foreign market selection and the choice of its entry modes drastically ascertain the performance of a specific firm. Entry mode can be defined as an arrangement for an organization that is organizing and conducting business in foreign countries like contractual transfers, joint ventures, and wholly owned operations (Anderson, 1997). Internationalization is part of a strategy which is going on for businesses and organizations transfers their operations across the national borders (Melin, 1992). The firm that is planning to have the operations across the border will have to choose the country that they are planning to visit. Anderson (1997) argues that the strategic market entry decisions forms a very important part of an organizational strategy. The decision to go international is part of the internationalization strategy of the firm. Multinational Corporations that desire to have international operations will find the strategy to go international, the mode of entry is very important. Even though there are studies which have shown that the main effect of being pioneers in a market promises superior performance in terms of market share and profitability than the late movers, Luo (1997) and other researchers have found out that the effect of the first mover may be conditional and will depend on the mode of strategy that is used (Isobe, & Montgomery, 2000). There are different strategies that MNCs can use to enter new foreign markets; they include exporting, licensing/franchising, full ownership and joint ventures. The mode of exporting entails a company selling its physical products which are usually manufactured outside the...
The international business development has heightened the importance of international market selection (IMS) of companies, especially for their exporting strategy. However, not many companies really comprehend the geographical, social, economic characteristics of foreign countries in comparison with their home countries (Cavusgil, 1985). This fact has challenged many studies to create the optimal approach for IMS. The major question is: Which foreign market should a company enter? Thus, this report focuses on providing a practical consultancy to evaluate and determine its most appropriate foreign markets.
The organization has had to ensure that it has retail stores in many countries globally and website options in more than 100 countries. The company further enhances access of online stores in more than 37 countries which is accessible all the time and people are able to access the services regardless of their location. Globalization further affects the organization in the sense of international market management which requires it to engage in strictly global decision making. The organization’s production networks have been geared to enhancing global competition (Lüsted, 2012) .The Company is further good when it comes to seizing the opportunities available in global market. For the organization to find efficient as well as cheap means of production, it has to bargain hard so as to allow its contractors to have low profits. This mostly is consequential to the suppliers cutting corners with the use of cheap
Firms exist with the purpose of create and deliver economic value (Bensaco et al 2010, p. 365); therefore, business that create better economic value than its competitors will attain an advantage position in market place. Companies might try to improve its sales (profit) through domestic expansion, product diversification or by internationalisation; this report will focus on the reasons of espressamente Illy to expand internationally; additionally, its sources of competitive advantage and, the analysis of three markets in which company want to participate.
How does expanding internationally benefit Wal-Mart? What factors drove Wal-Mart to start expanding business across national borders?
In case a company wants to be successful in their export business the following should be considered. The goals of a company are in harmony with the exporting business and what the company wants to gain from the export. The main company resources such as, capacity of production finances, management and personnel, that the export process will need. The last factor a company should consider is whether the cost incurred in the business will yield the required or worth profit/ benefits.
When entrepreneurs plan their business future they will consider how they can increase their business size or profit in a short period. Entrepreneurs may consider growing their business or company by using a merger or an acquisition. These methods can be a speed up tool and a short cut to enlarge their business. (Burns, 2011) Also they can reduce competition, make it easier for entrepreneurs to think about the market and product development and risk reduction. Furthermore, some lesser – known companies can improve their firm’s image and market power by using merger and acquisition with larger firms. However, there may be risks associated with merger and acquisition related to lack of finance and time. (Burns, 2011) This essay will discuss more deeply the advantages and disadvantages of using mergers and acquisitions, showing how it can affect firms and market with the case study.
Products are not standardized and vary by country in terms of type, packaging and specification. This increases production time, production costs, lead tim...