¶ … Foreign Market
Determine which institutional and risk factors must be considered and whether they support entry or not.
The company needs to evaluate critically the risks and institutional factors before deciding on entering the foreign market. The institutional and risk factors must be relevant to the ambitions and expectations of the company. Institutional factors constitute three principal aspects. The first aspect of institutional factors is the political institutions for instance the nature of policymaking, regulations, and adjudications in the foreign market. The company intending to enter the foreign market must ensure that the political institutions support its mission and vision in the process of exploiting the scarce resources within the economy (Baek, 2011). The second institutional factor is the economic situation of the foreign country. Economic nature of the nation would be in the form of structure of the national factor markets and accessibility of the international factors of production. The third aspect of international factor is the social-cultural institutions for instance the informal norms or regulations.
In order to maximize the business effectively opportunities in the new environment, the company seeking to enter the foreign market must be ready to tolerate the differences in the new and the previous settings. This is because; there is considerable variation in the laws and regulations, in relation to the acquisition of property, registration of new businesses, development or recruitment of the workforce, importation of production factors, exportation of output and capital, contractual concepts, taxation criteria, licensing process, and feasibility of exit. It is also crucial for the company to evaluate the competitive level of the new market and potential customers or audience in relation to the production lines. Some of the relevant risk factors of entry into new market environment might include trade tariffs or barriers, information of localization, price determination, and subsidies relevant to exportation process. Cameron International Corporation must consider if the institutional and risk factors above support its interest into involvement in the new market (Seyoum, 2011).
Conduct a VRIO analysis to determine whether entry is supported
VRIO framework represents effective and efficient tool to evaluate or examine the internal environment or position of the company. VRIO seeks to answer four relevant questions concerning the internal environment of the company. The first question of the VRIO is in relation to Value. Under this examination, the company examines if the resources available at its disposal have the capacity to exploit opportunities in the new or foreign market. The second question is a rarity of the resources. The question seeks to address the percentage of the number of competing firms controlling the scarce resources. The third question is imitation. The question seeks to answer notion of existence of cost disadvantage in the acquisition or development of the resources of production activities. The last question is organization. The question seeks to examine if the policies and procedures of the firm are capable of exploiting the valuable and scarce resources within the market (Chris, 2006).
Factors of VRIO
Status VRIO Questions
Expectation of the Firm
Question of Value
Yes (valuable)
Partial Competitive Advantage
Question of Rarity
Yes
Competitive Disadvantage
Question of Imitation
Not Costly to Imitate
Competitive Disadvantage
Question of Organization
Yes
Competitive Disadvantage
Application of the valuable resources, minimal cost to imitate, effective and efficient organizational concepts, and presence of rarity of production resources indicate that the company can enter into the new market and sustain significant exploitation of the new environment. Sustainability of the new market would depend considerably on the organization of the activities of the company effectively. In the examination of the VRIO, Cameron International Corporation scores effectively in relation to financial status of the firm. The revenue and profit levels are valuable hence supplementing the human capital within the organization. Although the resources in the new market are in the hands of few individuals, the company can obtain competitive advantage through proper and applicable business organization. This might in the form of forming alliances with the resource owners or concentrating on the quality services and products to consumers. This would make the company to maintain the global consumers while attracting the potential clients in the new market environment. Extensive application of the company's strategy would indicate that the revenue and profit levels of the firm would increase while realizing reduction in the overall cost of production.
Assess existing cultural issues to determine how they should be addressed should the company enter the market.
Cameron International Corporation entry into the new market should focus on how to...
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