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International Business Management – Kalzip Roofing Pte Ltd
Moving towards global market ------------------------------------
The theories ------------------------------------------------------
Application of theories to the situation----------------------------
- Global Market Entry Strategy
- Indirect Exporting
- Direct Exporting
- Joint venture
- Direct Investment
Kalzip Roofing Pte Ltd does manufacture of roofing equipment and installation solution. Founded in the UK, kalzip roofing was established in the installation market since 1968. And since then the very first well-known assignment was Numberg Concert Theater, in today there are over 80 millions square feet’s of the company roofing is installed all around the world. Furthermore, the company headquarter manufacturing plant located in Germany and till today is still on high operation. The Company has different similar factory set up across Asia Pacific, UK and United State and that exclude the sales office. Till today, the company is optimistic to open up more newly develop technology and moving towards better future.
As part of the region business, in Asia pacific Singapore was used to store material as a warehouse usage purpose. And as per the financial report shown that the business entity is not in a profitable shape when the business entity was hit by financial difficulty. It was taken into consideration by Tata Steel to buy the firm from Corus Group and finally the decision was taken to execute the purchase. The entire acquisition took about 1 year.
Presently the business turnover that generate revenue is spite into 75%/25% each of the respective owner. The number of employees who employed under Singapore down from 102 to 30. With the major downsizing of operational team due to the incompetency of the planner.
Kalzip roofing objective is to use restructured Singapore operation to figure out market opportunities in some of the undeveloped Asian countries. Kalzip is conscious of the business in need to improve their propensity and wherewithal to excel in today markets. Moving forward, the group will be working with few external adviser to become more wiser in gathering market information and expand their business to the global market.
The company wish to use Singapore as a stepping platform to other non-business operated countries in Asia pacific. The business development team propose an favourable and profitability country like Myanmar. The management team need to bout and comprehend the unknown market and establish a suitable market entry game plan.
Moving towards global market
The right tools to establish a global game plan is to comprehend growing economic and expertise replica (John Legend, 2003). This assignment discusses the multiple aspects of international business. “The global business marketing game plan is reached tough with external fluctuating such as market act & procedures. With all these obstruction to entry it would seem that a global marketing game plan is almost unsustainable (Jason M Gelsmino)
Companies with strong global game plan have outstand over market schedule that only compete in local markets. Some edges notwithstanding pliability, miscellany, assortment and workable cost of the actual product and customer satisfaction. As market strategy become more recognise with global marketing schedule their aptness to belittle and downplay the barrier to new entry swell. Marketing game plan address some typical problems that companies have encounter in the past when coming across with global market; such as sales and market level, quality control of the finished goods, and timeline issues, tools advance and the today network allowed market to weld in local market at any time. This is an rewards as it provide a high degree of mould ability/stretchability and upward customer service level (Jason M Gelsmino)
A medium sized company to be global business contestant need to be more advantageously before obtained any provocation global start-up faces 3 dares. Firstly are the organizational issues and transcendental issues generated by distance and by dissimilarity in culture, globalization, education evolution levels. Even adopting to the new workweek can be quite texting for small firm employees when come to his/her first day at work. (Greco, John A.Jr, 2005).
Secondly is superintend the setback (and moment) of affair – that is, the divergent nations political, regulatory, forensic, tax and employment environments. Thirdly, newly venture business will find their ways to participate with much bigger firms with far lesser resources. To prosper, companies must state coherent their rational for going global, learn to build network with more established business associate, shine at local market and produce a multinational enlightenment within the organization (Hutt, Michael D., Speh, Thomas W. 2004).
Strive for capturing international Business
When a company makes a determination to enter a new environment or market, there are variegated issues that need to run through. There are but not limited to cost liabilities, business risk and the degree of authority which can be utilized. The straightforward and manageable method of entering the market is usually exporting, using undeviating- agency or concomitant technique – counter trade. On the other hand, there are more labyrinthine forms include but not limited to joint ventures with developed business partner.
“Labrinthine forms include truly global operations which may involve joint ventures, or export processing zones. Having decided on the form of export strategy, decisions have to be made on the specific channels. (Market Entry Strategy, 1997)
Contrivance vital structure for finding resources
The theories talk about above portray a concise imagine of the main component that a company should though about when gauging what markets to penetrate and market to do analysis. These theories may also be functional in rating which market entering portray survey of target market, quiescent challenger, SWOT analysis and constitution to enter preferred market. For the business their prefatory juncture of trade, global growth choice and assistant with commercial and supply chain classical (Armstong M.A, 2006).
A SWOT scrutiny is done to assess the Strengths, Weaknesses, Opportunities and Threats intricate in Kalzip roofing business. It intricate itemize the target of the business or project and recognize the internal and external element that are appreciative and antagonistic to obtain those goals. Appreciative element as well as antagonistic element is used to peruse corporation and outward abode (Chermack, Thomas J, 2007)
Application of theories to the situation
Kalzip develop its own roofing via its own manufacturing facilities and to gain much higher safety standards, the group has innumerable initiative that was newly created and driven by the respective Health and Safety professional within each region. The workforce of the roofing industry today, is much more educated at a higher level Based on the global division of workforce skills of new equipment and ideas. Strengths for processes of the business, purchasing and input notwithstanding: Good quota of raw materials.
Due to competitive advantage today, there are many well established roofing multinational company situated across Asia pacific region.
The likelihood ahead for the roofing industry are – topographical ranking of the country (effortless entry to Europe, Russia and Turkic republics) enlarge connection with the regional countries, the low level of handful to these markets so far. The business today continue to explore new opportunities via apportionment and enlarges/swell economic relation and escalate the business to other industry such as oil and gas and shipyard .
The agonize is that the international / worldwide pecuniary crisis has reduced its confidence in the fate and raise glom about the current. Fast broadening / thickening eased exasperation with unscrupulous politicians and demanding environment. It proffer at least the chance of superior health care and pedagogy and andragogy which lagging much behind as compared with Europe standards. But the average dwindle in GDP this year is a significantly dropped 8.2%. convalescence is await o be slow. So much rather the east Europeans face much higher taxes, heavy debts, lower spending power and lesser jobs. This is why in the eye of the investor – “The production surmise of danger would include : The affair of state wobbly country, lack of amenity, sparse, exorbitant/extortionate, temporary, high risk investment. A poor resemblance for the country imports and exports procedures. Erratic and rickety and inadequate buildout of free trade rules and procedures.
Global market entry strategy
Based on (Malht, Aarwal & Ulgado, 2003) the pick of foreign market entry strategies is an important portion of the internationalisation operation for companies today. The entry mode a company select for a foreign market has significant leverage on the extent to which the company exploit on market potential and on the strategic predominance it has over market progress. These entry modes include importing and exporting, the use of representative and purveyor, promised deals such as allowing sublease and franchising, JV, strategic co-relation, and wholly owned foreign direct investment (FDI). This paper will try to rank one another of these entry modes, exploring the benefit and drawback of each market entry game plan and can become a high restriction to the worldwide market. Price cuddle search and haggle costs. Fleshly interval, language restriction, warehouse costs and risk limit the undeviating observe of market leaders. Implementation of agreement may be expensive and feeble legal amalgamation between countries creating more and more tough condition. Also, these elements are important when bearing in mind a market entry strategy. In actual all these may be so expensive and risky that Governments, rather than private personnel, often get intricate in commodity system.
Figure 1 and 2 below (Market entry strategies, 1999)
The evaluation of the market for an artefact or favour, counting the investigation and survey of market treads, determine the contention, and manage/direct market research is important. As market research has already done in previous section of this assessment, few key business game plan to enter the market using the model above figure 1 and 2 which identified the next level and chase new market need to traverse and plan outside own original business zone. It decide for erudition and conclusion and settlement making on how to answer new rivalry, customers, JV partner, contractors and other market players – at higher performance and in unconventional domain (Market entry strategies 1999).
- Indirect Exporting
This technique of foreign market entry includes the exporting builder engaging an individualistic/stand-alone companies, which becomes the export section for the marker. Indirect export often to be said is a domestic sales (Yoshino MY and Rangan U.S ,1995). Maker finish domestic sale that in returning to an export sale revenue a third party (Foley J, 1999). In the simple term, indirect export elaborate selling to the person who do export.
- Direct Exporting
The unalike between indirect and direct exporting is that, the maker execute the entire export process rather than emissary to others. The exporting companies deal with every characteristic of the export operation from market scrutiny and handling paperwork to foreign dispensation and collect payments.
In cases like Kalzip to enter the other region market may be a concoction of indirect and direct exporting and may obtain with assemblage sequel. As in the start-up process kalzip may incur less cost in the early stage of entry. The representative trustee will help the company like kalzip to establish the clubbable and good-natured image and absorb about the local venture market. Acquire confess about the market and then without hurrying establish the businesses.
Bases on (Johansson, 1997) licensing include “offering a foreign company the rights to use form’s proprietary technology and other know how normally in return for a fee plus a royal on proceed and income”. The licensor may give the licensee the prerogative and privilege to use the company charter and copyright on a specific goods or a process, creator know-how, tech specialized guidance and helps, after sales advice, or the use of the emblem or the firm name (Hollensen, 1998). The duration of the licences may very much dependable, as mentioned by (Jeannet & Hennessey, 2004) be contingent on the level of venture/speculation needed by the licensee to entry into the market. It is always the norm for the licensee who make all the needed capital investment with regards to equipment, marketing disbursement etc. Neither party may insist on a long and robust agreement in to generate the cost of investment and speculation.
- Joint Venture
A JV partner with a local associate constitute a more large-scale and sizeable form of involvement in foreign market than whichever exporting or licensing. A JV is distinguisher from other forms of calculated and deliberate agreements as an associate generate a separate legal entity (Cateora & Graham, 2002) raised 4 factors analogous with JV:
- “JV are enchanted, unconnected, legal entities”
- “They confess intent by associate to tell in management of the joint venture”
- “They are coalition between permissible joining entities such as private coporation, Public sector or government agency and not in the middle with individuals.
- “Justness position are held by each associate”
A JV may be the one and only method for company to merge into a country if authority agreement debate practices regularly and habitually approbation Local Corporation or if laws interdict foreign control but allow JVs. Alongside control diplomatic/party political and pecuniary risk, JV gives a lesser risk as compared with the rest. In JV the value and threat are going to be much lower, shield resources that can’t be achieved via the market. Companies have ameliorate access to monetary capital, ease of economies of structure and satisfaction of size. They also may have admittance to new skills and management procedures.
There are 6 different kinds of JVs obtainable to companies and these are outlined below.
· Direct Investment (Greenfield investments)
Somewhat than inaugurate an undisputedly possess ancillary from scratch the firms can contemplate an accession of an existing company. Accession offer swift entry into a market and more often furnish access to broadcast telegraph of message.
To encapsulate this assignment, I have developed a models defining the advantages and disadvantage of each foreign market entry game plan.
The assortment of a market entry game plan is disparaging to the prosperity of a company investment and venture operations. Each of the company on
The selection of a market entry strategy is critical to the success of a firm’s foreign operations. Each firm planning on internationalising has a differing set of circumstances. These circumstances can be either internal or external to the firm. Internal circumstances include availability of resources, experience of staff and spirit of entrepreneurship.
External circumstances include size of home market, attractiveness of foreign markets, and political conditions in foreign markets to name but a few. These circumstances determine the suitability of the different market entry strategies. The selection of a market entry strategy is critical to the success of a firm’s foreign operations. Each firm planning on internationalising has a differing set of circumstances. These circumstances can be either internal or external to the firm. Internal circumstances include availability of resources, experience of staff and spirit of entrepreneurship. External circumstances include size of home market, attractiveness of foreign markets, and political conditions in foreign markets to name but a few. These circumstances determine the suitability of the different market entry strategies.
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