Business Research Report
Scenario # 4
Executive Summary 3
Introduction 4
The need for environment investigation 4
Analysis of existing venture 6
New marketing mix 6
Recommendations 7
Conclusion 8
References 9
Executive summary
The following report is prepared with regard to company’s strong commitment to growth in terms of expanding to the new market. Expansion to the new market is one of most widely used growth strategies, along with other market-related strategies and such product-related strategies, as product expansion, diversification and acquisition. It is evident that making decision on expansion to the new market in a new geographical area requires significant efforts and research, aimed at finding out peculiarities of external and internal environment the enterprise is going to function within; evaluating affordability of launching a new venture in terms of the findings, regarding external and internal environment in receiving country,, company’s assets, financial statements and credit history, as well as elaborating on a new marketing mix of the product with respect to the new market.
The subparagraph, dedicated to the first research finding, aims at exploring the range of issues to be explored, as well as means and tools, necessary for exploring them, with respect to analyzing external and internal environment in a receiving country. Thereafter the focus of attention shifts to the issues, which concern a venture. In this regard the range of indicators, which can be used to explore current state of the venture, as well as necessary analytical tools, are being explored. Thirdly, the results of research testify to the fact that marketing mix of any product is highly dependable on the market the product is introduced into. Thus the influence of the environment on marketing mix is being researched into.
Recommendations formulate the range of issues, which are to be analyzed, when making a decision on company’s growth. This report serves as a prerequisite for an in-depth analysis of a broad range of issues, which are concerned with expansion to a foreign market.
Introduction
Expansion to new markets is one of important indicators of growth and success of a company. It is to be viewed as a critical growth tool, along with market penetration and a wide range of product-based growth strategies.
The sciences of marketing and management have worked out significant number of ways to critically analyze possible implications of making a decision regarding entering a new market. Nevertheless, it is evident that using too many different assessment tools by analytics without identifying the ones, whose results are crucial for a decision-making process, is likely to exert a negative influence on both the process of decision-making and further work on thorough elaboration of the growth strategy. Thus special attention is to be paid to identifying issues, which have to be specifically tackled in terms of pre-growth analysis. Moreover, management and marketing tools and means, being used to explore the issues under study are to be described with a focus of their relevance for the aim of research.
Research Findings
The need for environment investigation
The first finding of research under study lies in the fact that before making final decision regarding entering a new market, a company should properly investigate the market under study in terms of external and internal environment. Export expansion is most often concerned with improvements in company’s productivity, which is directly interconnected with a cost advantage over competitors and improvement of products’ quality (Newfarmer&Walkenhorst, 2009, p. xxii). Nonetheless, even if company has a vision of possessing significant cost advantage over competitors and having considerably improved quality of its products, it is important to be aware of possible influence environmental factors can exert on performance. In this respect it is necessary to conduct an analysis of the broad environment (political/legal, economic, sociocultural and technological forces) and the task environment (government agencies and administrators, suppliers, competitors, unions, financial intermediaries, as well as local communities and activists’ groups) (Harrisson, 2012, p.24). Analysis of external environment (broad environment) can be conducted with the help of such tools as PESTEL, while VRIO framework and analysis of existing and potential supply chains can help, when internal environment is being assessed. The complete understanding of how all enterprise functions should be conducted with regard to factors, which have been identified, should be developed (Ross, 2010, p.88). Relations between risk and return should be a special focus (Reily&Brown, 2001, p.21)
Analysis:
Getting to know forces and factors, associated with both external and internal environments in a new market is useful for both informed decision-making and creating a viable strategy of growth. Moreover, specific challenges can be identified before the company actually meets them, so they become preventable. Information, which was got in terms of analysis should be applied to all the activities the company is going to conduct at a new market. Analysis of external and internal environments of several countries can be useful, if board of directors sees alternatives for a market to be entered. Significant challenges, associated with external or internal environment, can prevent the company from entering particular market.
Analysis of existing venture
Business and risk come together, therefore, it is important to set up risk management systems, being comprised of process initiation, risk analysis and risk management itself (Chong, 2004, p.11). Appropriate functioning of risk management systems requires in-depth knowledge of the company. Basic information about the company includes type of business, primary products, strategic objectives, financial conditions and operating performance, major competitors, degree of competitiveness, company’s position in the industry etc (Drake&Fabozzi, 2012, p. 15). Value chain is most useful tool with regard to internal environment analysis. Resources, capabilities and core competencies are to be analyzed. SWOT analysis framework should be also applied.
Analysis:
Making decision regarding entering a new market requires not only an in-depth understanding of what is going on at a potential new market, but detailed internal analysis, which can help board of directors become aware about the risks, stemming from company’s current state, and being capable of escalating after a new market is entered. Internal analysis is useful both for making a central decision regarding growth, and further strategy-related decisions.
New marketing mix
The central assumption, concerning marketing mix, is that if marketing professionals create and implement the right decisions regarding feature of the product, its price, and the ways it will be promoted and distributed, the business will be successful (Baker, 2012, p.287). The objective of marketing mix is to influence the consumer’s or user’s purchasing decision (Belohlavek, 2008, p.87).
Analysis:
Marketing mix is critical for successful functioning of the venture. As the objective of marketing mix is to influence buyer’s purchasing decision, it is important to have the vision of potential buyers and the way they make decisions. It is natural that in different countries people may value different feature of the same product, have different opinions regarding pricing and be more influenced by one type of promotion, than another. Furthermore, each new market requires elaborating on unique distribution strategy that can allow reaching potential customers in the most effective way. Features of marketing mix, which is to be developed with regard to new market can exert significant influence on costs, associated with the project. Therefore, draft marketing strategy should be developed prior to the decision on growth.
Recommendations:
- A comprehensive analysis of broad and task environments in a potential receiving country is to be conducted.
This means will help the company make an informed decision on prospects of growth in particular environment.
- PESTEL tool is to be used to analyze external environment, while VRIO framework is best means to research into task environment.
Usage of these tools provides the company with the chance to get accurate data regarding business environment.
- In case alternative markets exist, comparative analysis is to be conducted.
Results of comparative analysis will help the company make an informed choice of the market to expand to.
- Company’s internal analysis should be conducted with regard to potential influence of a new venture on company’s profitability and market position (Value chain analysis, SWOT analysis)
Results of internal analysis are needed to show company’s current state and predict the influence of growth decision on it.
- Draft marketing strategy, respective of peculiarities of a new market and target group, is to be developed prior to making a final decision on growth
Draft marketing strategy is needed to understand the investments, which relate to growth.
Conclusion
Making decision regarding company’s entering a new market is concerned with significant preparation work, which includes external and internal analysis of potential market, internal analysis of the enterprise, as well as elaborating on draft marketing strategy for products, which are going to be distributed. All these actions should aim at finding out, whether it is possible for a company to launch a venture in a specific country in a specific economic situation and what kind of challenges a company can face with regard to these activities. In some cases the actions under study can be of use, when elaborating on risk management strategy, and can also be viewed as preventive measures with regard to possible losses. The recommendations, provided in the paper, are designed to help a company base its growth strategy on an informed decision, which takes into account peculiarities of the environment of the new market, company’s internal environment and necessary changes to marketing strategy.
References
Baker, M. (2012). The marketing book. London: Routledge
Belohlavek, P. (2008). Unicist marketing mix. Carson City: CRC Group
Chong, Y.Y. Investment risk management. London: John Wiley&Sons
Drake, P.P., Jabozzi, F.J. (2012) Analysis of financial statements. London: John Wiley&Sons
Harrisson, J.S., John, C.H. (2009). Foundations of strategic management. Londind; Cengage Learning
Newfarmer, R.S., Shaw, W., Walkenhorst, P. (eds.) (2009). Breaking into new markets: emerging lessons for export diversification. Washington, D.C.: World Bank Publications Ranganatham, M., Madhumathi, R. (2004). Investment analysis and portfolio management. New Delhi: Pearson Education India
Ross, D.F. (2010). Introduction to supply chain management technologies. Boca Raton: CRC Press
