Many firms have been shunning away from emerging markets instead of embracing theses opportunities to thrive in the new markets that have been presented by these economies. With the constant increase in competition that the firm has been encountering from numerous firms both local and international ones, it is the high time for Elecdyne firm to go international. For it to survive in the present business environment, it has to move out of the city of Tokyo to outside markets. The firm has for a very long time now depended on the local market both for the supply and the purchase of its products, the competition that has recently been posed by more stable firms have threatened the operations of Elecdyne and it is almost being faced by financial clinches the first since it came to operation in 1990. In addition to competition from more stable firms, the firm is facing stiff competition from new market arrivals whose products are cheaper than the prices of their commodities. Seemingly, these arrivals have made prices of both raw materials and human resources to increase adversely affecting its annual budget.
In the report presented here, taking into consideration of how important the developed countries are, we are going to use three countries; the UK, China and Mexico. The factors present in these countries are analyzed alongside those presented by the Japanese market with the aim of arriving at the most appropriate location for Elecdyne to locate its new branches. This will be looking at the strategy that it will employ in going international before deciding on the competitive products to be produced in this location.
The tastes and preferences of the people have changed, people are influenced so much with technology and they would like to buy electronic appliances that satisfy the current innovations (Dick & Merret 2007). Since Elecdyne is coupled with its lack of expansion to outer markets, research experts' especially fresh graduates are opting to find employment with competing firms where the remunerations are attractive compared to the offer of Elecdyne. These moves have real crippled the firm. This paper tends to look at the various methodologies that the firm can employ so as to revive itself and continue enjoying some of the privileges it was used to before the predicament it is almost facing came. We are looking at how we can internationalize the firm through weighing the various strategies that can be employed. Some of the strategies are the ones various firms that were initially local have managed to employ and have become fruitful in going international and rising in to some of the most wooed multinational firms.
Internalization is not only going to offer the firm new market environments, but it earns the firm a new reputation; it gives a firm the opportunity to open and get new venues to sell its products and share resources amongst those firms that have already developed in this field of study (Blomsterno & Sharma 2003). Internalization will enhance the firm access to new materials at low costs, new technologies because the reputation it has gained attracts new blood who come in with new ideas on how to produce products that meets the new tastes and preferences that the market presents. However the internalization process is not a smooth sail, there are numerous challenges that need to be overcome and the general process should be carried out very carefully with a very keen analysis. For instance, taking our example at hand, Elecdyne, it has very minimal resources to go internationally into a number of countries at once, this therefore means that the internationalization of the firm shall have to be a gradual process, enter one country at a time. Apart from the regulation by resources, the firm is faced by cultural issues and the risk factor should be taken into consideration.
Opportunities as the same as threats present themselves to a firm in its endeavors to expand. Presented with the increase in competition, the only way a firm can be able to penetrate the market is through coming up with ideas and products. This is only necessitated by innovation and invention. The most important facilitator that should be accorded a lot of attention is the internet, new business get ideas and solutions to most of the problems they are facing, the consumers are made aware f the existing products and it enhances the issue of globalization (Maskus 2000). Often, new opportunities present themselves in the market, to fill these opportunities, small enterprises are needed. It is therefore the role of the SMEs to realize of the availability of these opportunities and exploit them to enjoy the competitive advantage that they present. In addition, networks and partnerships are also of great essence in the present market environment, ideas and human resources shared among the different firms enhances efficiency, costs of production are reduced significantly among many more advantages that accompany the strategy (De Liso 2009).
For the firm to identify the most appropriate location to expand its businesses to, a SWOT analysis is mandatory and essential. This has to be combined and related to the PEST analysis so as to come up will clear and effective strategies to be employed. As Alhsstrom (2009states, carrying out a SWOT analysis is a very fundamental step before implementing the various goals that have been set up by an organization. The SWOT analysis often encompasses of both internal and external business factors and how they tend to affect a business. Through this, a business is assisted to come up with clear and achievable strategies that can easily fir the specified environment. On the other hand, the PEST analysis concentrates and examines the macro environment presented to the business. Through carrying out a PEST analysis, we shall be able to give a comparison between the environments present in the different countries we are interested in and pick the one that gives us the most conducive macro environment factors. The PEST analysis is a must fro the firms that are interested in going international, it helps you strategies and know the angle to apply in penetrating the markets that are presented by the available markets (Haahti 2008).
Elecdyne SWOT Analysis
SWOT represents strengths, weaknesses, opportunities and threats. SWOT analysis refers to a case where these factors are analyzed individually to determine the steps that a firm is supposed to take so as to penetrate new markets. The analysis also looks at the position a firm is in comparison top other firms that are within the same industry. As presented by the information regarding Elecdyne Company, the company's top management officials is made up of individuals who have been educated in western countries and who are very eloquent in English language. With this,
SWOT analysis of the company
- The top management officials of Elecdyne company are all very eloquent speakers of the English language
- The company has been in operation since 1990, this implies that it has been carrying out its operations for the last twenty years. This implies that the firm has a well established competitive market.
- The firm has for the last twenty years been using and receiving its resources from the local environment. This has led to it having very tight links with the producers of these resources.
- The firm has a lot of experience in its line of production especially in the production of electronics such as VCRs, TV sets, DVD players, MP3 and many more electronic appliances.
- The relations existing between Elecdyne and its retailers are suppliers are very cordial.
- Its location in the city of Tokyo places it at a very strategic position where the unfolding of the market can easily be identified and necessary steps taken.
- Lack of skill since new granduants have opted to work for stable and well established firms such as Sony.
- There is lack of innovativeness and the firm has failed to attractive new skills especially because of its low wages to employees.
- Most of the key staff has left the firm due to the inefficiencies of the firm to retain them. A lot of knowledge and skills have exited the firm's doors to competing firms.
- The presence of established and new arrivals in the in industry has led to the prices of resources increasing tremendously making it difficult for the firm to afford such crucial resources. This has led to high expenses being incurred thus risking the company's profit margin.
- The lack of focus and specialization denies the firm the economies of scale it would have gained if it were to specialize in a single product.
- The firm has an opportunity to develop new products and appliances if it only made its rewards to employees more attractive.
- The new competitors have low quality products and for those firms that are more established their products are more expensive than the firms'. Products and services.
- Penetrating the new markets shows an improvement in the profit margins of the firm.
- The end-users of the products are interested with new products arriving in the market and they often respond well to new ideas.
- The possibilities of extending to new foreign markets are very high.
- Legislation could impact the company's plans to expand.
- The effects presented by the Japanese market plays a bigger role in would favor larger competitors.
- The cultural differences and beliefs in the foreign markets presents potential threat to the firm especially since the demands for the different countries is affected by age and the general beliefs that guide their daily lives.
- The demand for products has become seasonal.
- The retention of key workers and employees has become very critical as most have opted to work for firm's that are better paying them for their services.
The SWOT analysis presented above has been derived from the company's perspective, what it presents and the available opportunities that are presented to it. Elecdyne as a firm can do very well if it utilizes the strength that it has and taking into consideration its weakness and threats. Taking the right measures can see the firm taking and occupying very prestigious positions even in its first year in the new market.
It is obvious that the political environment presented by a country affect a business either positively or negatively (Maskus 2000). Taking into consideration of the political environment is not an option but it is a must. The barriers presented have negative influences on the business and a number of business activities are limited by these barriers. The stability in a country politically has an equal impact on the businesses. Blomsterno & Sharma (2003) attests that the intellectual property protection that involves innovativeness and patents plays an important role in the global market context.
The economic environment of a business consists of resources, costs, the characteristic present in the market and the resources available. From the information presented about Elecdyne, it is very clear that he Japanese environment has presented it with these same challenges.
Technology plays a very big role in the society; the advantages that it presents can not be taken for granted by any firm that wants to prosper. Taking Japan as a business environment and market, it presents itself as one of the most innovative country in the world that comes up with numerous innovative technological ideas. The country has also invested heavily in research and development. The other market countries that we are using in this comparison are below Japan in technology and this boosts the standing of Elecdyne in these countries. Despite the best engineers and researchers being found in Japan, their costs are very high and the firm has not been able to afford their services. This therefore implies that if the firm had the ability of hiring them, and then maybe we would not be carrying out this analysis. The technological factors are very essential but the costs factors beat its essentiality.
From the analysis, Hungary has presented itself as the best environment that contains well balanced factors in relation to location and costs, labor force, political issues and technological factors. The country that is located in the central eastern part of Europe has a more sensitive market in terms of prices when compared to the market in Japan. This shows how favorable the market can be to Elecdyne. The strength the countries have in terms of costs management and the weakness in technology levels of the nation implies that the firm can be able to afford labor force easily and cheaply. The strategic position of the country gives it an advantage in accessing the whole of the European market. When comparing Japan and the United Kingdom, these are two developed countries, this therefore means that the rate of competition there is very high and Elecdyne can not survive the pressure present. The UK may present the same problem the firm has faced in Japan thus making it to fail to achieve its goals. There are a lot of risks in china on the other hand despite the numerous opportunities it presents (Consumer Electronics Industry Profile: China 2010).
In relation to the paradigm presented by Eclectic (Dong & Glaister 2006), internationalization of firms can be addressed by the use of various assumptions the perspectives lie heavily on internationalization issues, location specifics and ownership specific. A number of methods can be employed by a firm to go international. Global reach has become the name of the sport being played by firms into become multinational corporations. Despite the internalization process presenting a number of challenges, firms use all means to ensure that they become successful in the establishment of firms internationally. Methods employed during the internalization process include exports, foreign direct investment, and licenses. Taking the case of Elecdyne, t6here is only a single option that can work effectively for the firm. The other two options are not appropriate for it at all. For instance, looking at the license option, the firm can not be able to use this since the firm since inception has been operating in Japan alone, the firm has never bought materials or it has never traded with any other place outside Japan, this makes the license method inappropriate for the firm. Foreign direct investment has presented itself as the only workable methodology o the firm. In direct investment, there are a number of options that can be found under it, acquisitions and mergers, green field investment and joint ventures are just but a few of the methods under this option (De Liso 2009).
Mergers and acquisitions are very easy to be formed, and the advantages that arise from such ventures are very many. The exercise is very easy and is formed very fast. On the other hand, the process is very costly and finding the best partner is also cumbersome (Hofstede 2010). Affording such expenses for a firm like Elecdyne is dreams come true especially with what it is currently facing. The Greenfield investment is a control and strategy methodology that has a number of advantages, however, it is slow, the time taken to realize the set goals is very long thus inappropriate. The costs and expenses for this process are not small, however, with grants and loans, it is very easy to leverage the burden brought about by costs. Lastly, joint venture is the other option present to Elecdyne. The process is not very expensive. The disadvantages for this process sets in when it comes to sharing control which leads to a lot of pressure especially in introducing change to the organization. Finding a partner that you can term perfect is very hard. In addition to finding this partner, Elecdyne will have to search for an appropriate site and a number of units to make the methodology function (Alhsstrom 2009).
Assessing the various alternatives present to Elecdyne, presents to us the various consequences and repercussions that each methodology will present to the firm. Weighing these options and looking at their effects, we are left with Greenfield as the best option for Elecdyne to penetrate the new market (Abrol & Bhalla 2009). Greenfield investment is more advantageous since it gives control of the business to the firm and an entity can be able to plan and set its goals according to its anticipations. As already discussed above, the costs of setting such a firm in Hungary is low and it presents its SMEs businesses with grants and loans from various places such as the EU and regional grants.
The report has discussed various methods that can be applicable for Elecdyne in various countries. Form the comparison presented, we have found out that Hungary presents the most appropriate environment for the firm to set its business units with a view of expanding its business operations. The various advantages that Hungary presents include low costs of establishment, availability of grants and the availability of market and improved technology (Haahti 2008). And in going international, Greenfield investment has been decide on as the method that will enable the firm achieve its goals when compared to the other options at hand.
However, partnership can be opted for if the firm is interested with future market opportunities in the business environment. This according to Alhsstrom (2009) presents a single solution to the firm and the future predictions on the way the markets and countries can be influenced can not be arrived at currently. In addition to this, the analysis carried out on the various countries is influenced by a number of factors and this means that they are subjective to a number of interpretations. The constraints presented here must be considered while making decisions. Having plan B is essential and this has to be evaluated equally.