Foreign Market Entry Diversification
Foreign Market Entry and Diversification
Why Diversify?
Diversification is expanding a company's current operations by adding new markets, products, services or stages of production to its current portfolio. It is all about entering a single or a series of new business lines that differ from its current operations (Cengage, 2006). Murphy Auto Company (MAC) is one of the largest luxury automobile company which wishes to diversify and enjoy even greater profits compared to its competitors. The justification behind the need to diversify first and foremost is the intense competition that the brand faces from cheaper car companies, since due to recession, people prefer buying cheaper alternatives compared to buying such brands like Mercedes and MAC.
Another justification for diversification is the inability of the firm to fully satisfy the needs of the target market owing to the cultural differences of societies they operate in. By diversifying into a product that is the best and general fit for all consumers around the globe, the company could remove this weakness and thus strengthen its market position. As the company's manufacturing facility has been established in only a few areas, it is unable to reap the rewards from global efficiency and thus if diversifies and set up it facility globally, will be able to take advantage of these operational benefits.
Moreover, the firm's decision of expanding its product line to producing green vehicles would be a master stroke that will help it grow even further, since high fuel prices and global warming has made the production of fuel cars somewhat counterproductive. Diversifying in this field would help the firm earn greater profits at lower costs. Furthermore if the brand diversifies in introducing Hybrid-electric fusion cars, it will be entering in this market as a competitor to Mercedes and thus would have the chance of taking advantage of selling efficient plug in cars to customers alongside Mercedes and intensify competition for them. With a diverse product portfolio the company would be able to relieve the marketing competition pressure as customers would have many options to buy from which have not yet been introduced by any other automobile company.
Diversification strategy
The diversification strategy that would go best for the company is Concentric diversification. Concentric diversification is where a company expands its operations by adding related products or markets and thus creating a strong product or brand portfolio bringing benefits of earning higher profits and growth (Cengage, 2006). MAC should diversify into new markets by launching its products into new foreign economies. Although the brand is available in four continents of Europe, Middle East, North America and Asia, there are certain countries within these continents which could be potential markets for the company to expand in. Moreover, the company could expand into new markets and industries, by introducing products that do not belong to automobile industry.
The products that it could introduce in the existing markets is the production of fuel efficient green cars which are environmentally friendly and will have solar panels installed to provide energy to the car. Another new product,/car that MAC could introduce is the electric/Hybrid cars which will require electricity current to recharge the battery rather than internal combustible engines. As the brand is all about luxury cars, it could diversify by introducing sports cars as well. The brand is well-known for its luxury cars and has a huge loyal customer base. Being the only competitor against Mercedes, the brand will do well in the market.
The industries in which the brand could diversify are the environmental technologies. By introducing fuel efficient cars, it will be giving birth to a new industry of environmentally friendly technologies. It could diversify through backward vertical integration by acquiring or merging...
19). The family-friendly atmosphere at the company's restaurants has also been conducive to its growth, as well as Applebee's combination of good food and alcoholic beverages. For instance, Crandall and his colleagues suggest that the casual dining nomenclature ". . . includes such settings as Applebee's where the food comes with a relaxed atmosphere. The concept here is 'not-so-fast' food for aging boomers who may still crave a burger
Office Depot started its operation five years after Staples. The company has aligned its business strategy to target increasing its market share through business policies similar to those undertaken by Staples Inc. The company is locally owned and faces difficulties in capital expansion to be able to roll more distribution outlets similar to Staples. This has incapacitated the company in acquiring economic of scale in operation. The company currently
Pharmaceutical industries have to operate in an environment that is highly competitive and subject to a wide variety of internal and external constraints. In recent times, there has been an increasing trend to reduce the cost of operation while competing with other companies that manufacture products that treat similar afflictions and ailments. The complexities in drug research and development and regulations have created an industry that is subject to intense
Corona Beer (Modelo) Identify and discuss the trends in the global beer markets. Driven by the rapid consolidation of breweries and channel-based selling organizations the global beer markets continue to experience flat or slow growth. With the cost of entry into this industry high from a capital investment standpoint, accentuated by high interest rates, the overall industry growth rates continue to be flat with differentiation at the product level contributing little to
Strategic Management The Case for Diversification Deltacom/Earthlink is facing a challenging operating environment. As a regional player in an intensely-competitive market, we face an uncertain future. We acquired Deltacom in order to facilitate future growth, but a quick look at our financials indicates that our growth has flatlined and our profits declined to almost nothing last year (MSN Moneycentral, 2013). One of the issues is that there was considerable overlap between Earthlink
For instance, McDonald's has a solid partnership with Starbucks that came as a natural solution to the increased consumption of coffee in its restaurants. Starbucks happens to be the world's leading specialty coffee retailer with a worldwide presence that matches that of the fast food producer. 4. Other factors affecting decision Vietnam is an Asian country with strong oriental cooking habits, which might not be very compatible with McDonald's typical menu of
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now