DataClear is a firm that deals with business analytics advisory and technical services founded in 1998. The firm’s main product is the ClearCloud, a software product that comes in 2 versions; one for the financial industry and the other for the telecommunication industry. The firm’s executives have sought a strategy to expand the firm in terms of its sales and market reach, considering the ClearCloud’s potential outside the two industries. There was a specific sales growth projection from its $2.2 million in 1999 to $5.3 million in 2000 (Kuemmerle 1). The firm relies on the viability of its products in the wider market domestically to expand globally in addition to the key employees who bring in different competencies and business ideas.
Central Issue
DataClear has shown interest in developing new business sectors and entering the international market having been on the market for two years. However, VisiDat, a British start-up firm was about launch its product and this meant that DataClear would face competition. In addition, the firm looked at the options of setting up offices in the UK, using an autonomous distribution of its software products in different countries or considering a strategic alliance with Benro, a software shop in Norway. However, there is also the option of concentrating its core business operations in the domestic market. The situation that the firm’s executive faces is that there is a dilemma on whether and how to expand its business into the global market.
ClearCloud had opted to concentrate on the international market, a factor that led to the reduced concentration on the opportunities in the domestic market. In particular, it was highlighted that the company had not focused its core industries on the domestic market in regard to the pharmaceutical, chemical, as well as petrochemical industries. The firm had focused more on generating cash flow rather than raising additional capital that would be able to fund the movement beyond its core industries (Kuemmerle 4). The missing element appeared to be the lack of a critical hands-on component that would facilitate the firm’s corporate expectations and entry orientations into the global market. The expansion and entry strategy decision appears to have been studied at the company level with very little research done at the brand level and hence there remained juggles in the expansion move.
Implications of the Situation
It is apparent that the firm would face competition in its quest to expand and thus there is a need to reconsider the strengths of the firm’s business first. For DataClear, the expansion decisions and lack of experience in analyzing the foreign markets meant a possible increase in the costs associated with managerial and transaction of the far-flung operations. The firm may also lose control over its primal sector that relies on the viability of the ClearCloud on the domestic market. This would imply the need to consider restructuring and institutional change in the managerial aspect to not only understand the foreign markets but to also coordinate business activities across the geographical scope.
Recommendation
Based on the dynamics of the situation, it may still be too early for DataClear to expand into the global market, considering that it lacks both a viable strategy and the managerial competency to coordinate the activities. The success or failure in the aspect of global expansion depends on sustaining the expansion based on understanding the global industries and competition dynamics rather than simply entering new markets (Twarowska and Magdalena 1005). It is recommended that the firm focuses on conducting a competitor analysis as a matter of priority to enable the formulation of viable strategies. To understand the foreign markets, the firm needs to understand the competitor in order to identify any weak points in relation to the competitors’ business practices and take advantage of them. The firm also needs to build the feasibility of its products in the local market by researching on how to improve their brand so that the success in the domestic market can be used to support its entry into the global market in later years. This will help the firm formulate a strategy that is more competitive in the global market.
Works Cited
Kuemmerle, Walter. “Case Study: Go Global-or No?” Harvard Business Review, 2001.
Twarowska, Katarzyna, and Magdalena Kąkol. "International Business Strategy - Reasons and Forms of Expansion into Foreign Markets." Active Citizenship by Knowledge Management & Innovation 19-21 June 2013: Zadar, Croatia. Management, Knowledge and Learning International Conference, 2013.
