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Consider the factors involved, including the market entry mode strategies that could be used, evaluate these factors, then offer recommendations to the British Safety Razor Company (BSR) on its forthcoming strategic planning.

Extracts from this document...

Introduction

Whether considering entering new international markets, or concluding that a revised strategy is needed for existing multi-national companies (MNC), the decisions to do so are based on numerous variants. This paper shall initially consider the factors involved, including the market entry mode strategies that could be used, evaluate these factors, then offer recommendations to the British Safety Razor Company (BSR) on its forthcoming strategic planning. Variants and Factors The fundamental reason for being in, or entering, a new market has to be potential demand (Arnold 2003). This in turn leads to opportunities for growth and expansion. Once demand has been established a business must consider both internal and external factors. Internally, consideration needs to be given to the overall goals and objectives, technology, product line, location and size (Bradley 1991). Does the organization seek market penetration in a select number of markets, or does it adopt a market skimming strategy, entering a large number of markets simultaneously? Managerial aspirations, experience and motivation are also relevant. Externally, and almost exclusively out of the business's control, are factors such as the market size and growth potential, the market's competitive structure and marketing infrastructure. The political and economic situation of both the home and international market environment including legal controls, legislation, barriers and the extent of the cultural divide are also to be included in the decision making process. The choice of market entry mode strategy is also dependant on the level of control a business requires, the financial risk it is willing to undertake, the desired return on investment (ROI) and also the business' previous or current experience in international markets. Certain entry modes offer little risk, lower returns but high degrees of control, others the opposite. The figure below demonstrates this trade-off; Control and Return Costs and Risk Figure 1. Adapted from Arnold 2003. Where a business has experienced international trade it can draw on research carried out by Jody Evans of Manchester Metropolitan University which found support for the hypothesis that "international experience" ...read more.

Middle

Local equity participation 2. In the event of unacceptable low minority shares (<25%), then establish a contract manufacturer 3. Develop a licensing fall-back should options 1 and 2 not be available 4. Investigate establishing wholly-owned manufacturing companies where conditions are favourable 5. Expand and modernize existing blade plants 6. Ally above proposals with local selling companies where possible. BSR has demonstrated a motivated commitment to re-entering the markets in the AAA group and has in place the management experience to carry this strategy forward. Recommendations At this stage the reader is directed to; 1. Appendix 1 - Country Briefings and 2. Appendix 2 - Selection Criteria Matrix. Based on this information, the entry mode strategies available to BSR, it's objectives and plans, and allowing for all variants previously mentioned; the following are recommendations for each country or group of countries. It is recommended that the AAA Group be subdivided as shown below; The AAA Group * Sub-division 1. Headed by South Africa and including o Nigeria o Kenya o Yemen * Sub-division 2. Headed by India and including o Pakistan o Iran o Iraq * Sub-division 3. Headed by Egypt and including o Algeria o Morocco * Sub-division 4. Headed by Poland and including o Russia o Ukraine o Turkey The political and economic situations in each of the four lead countries offer conditions suitable for a major commitment in the form of wholly owned manufacturing and distribution. These lead countries offer encouraging economic growth and relatively low inflation. Their governments are openly seeking FDI as an aide to economic reforms and growth. Any import barriers imposed by these countries will be overcome. It is recommended that BSR commission the acquisition or complete new-build of manufacturing plants in each lead country. The company has the past experience and current management strength to undertake such projects. Sub-division 1 In addition to manufacturing and distribution, the South African subsidiary will also take responsibility for Nigeria, Yemen and Kenya. ...read more.

Conclusion

* Activity Programme makes integration with the EU and WTO accession two key government priorities * Partnership and Co-operation Agreement commits Ukraine to providing the same treatment for EU investors as for its own companies * Foreign and domestic businesses receive equal treatment Yemen * Foreign investors are accorded national treatment and receive investment incentives * Government control has been greatly reduced * Although the government encourages foreign investment, it is blocked by the same barriers which cripple domestic investment * Investments usually require 25-30 % participation by a Yemeni partner Page A1 - 3 Appendix 2 - Selection Criteria Matrix Algeria Egypt India Iran Iraq Kenya Morrocco Nigeria Pakistan Poland Russia South Africa Turkey Ukraine Yemen Tariffs L H H L NA M L H L NO L L NO L M Other barriers Y Y Y Y NA Y N Y Y N Y N N Y Y Quotas N Y N N NA N N NA N N N N N N N GDP growth (%) 2.4 5.1 3.9 5.9 -50 -0.2 0.9 4.2 4.2 4 9 3.5 7.4 5.8 5.1 GNP US$ 1097 1168 402 2466 7037 356 1246 1376 466 3505 3028 3331 3026 973 318 GNI US$ (PPP) 5330 3710 2570 6340 NA 990 3690 780 1940 10130 7820 9870 6120 4650 750 Inflation (%) 24 6.7 4.5 32.2 45 7.7 1.5 21.8 2.7 11.3 40.5 7.2 49.9 23.2 22 Economic freedom 1.75 1.65 1.5 .85 NA 1.9 2.05 1.5 1.7 2.1 1.3 2.35 1.5 1.35 1.35 Guide. Tariffs Economic Freedom * 0 - 10% Low 0 - 3 (Zero = no freedom, 3 = total freedom) * 11 - 25% Medium * >26% High * NA Not Available GDP Gross Domestic Product GNP Gross National Product (per person) GNI (PPP) Gross National Income (per person) (Purchase Price Parity) 02360589 Page A3 - 1 02360589 Page 1 of 13 ...read more.

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