Nowadays, many organizations decide to expand their operations to several countries around the world. The method of internalization may vary from one organization to another as other companies choose to sell their products and services abroad, others decide to obtain their materials from different nations, while other organizations choose to move all their departments abroad. Every company that wants to go international must be prepared to implement global strategies that will bring about significant levels of competitive advantage. The internationalization process must begin by country selection which largely depends on proper knowledge of the market (Jansson 2013). This paper provides strategic recommendations to the Board of Executives at Allstar as to which of the three regions: Europe, China, and India sub-continent, they should enter.
Europe, China, and India sub-continent have got varied market structures and business environments. For instance, India and China are best known as ‘the international software center’ and ‘the global factory’ respectively (Jansson 2013). These two regions are therefore bases of low production that may attract any company that wants to extend its operations to the international market. However, Europe acts as a lower production base as compared to India and China due to the presence of the common European market that has been formed through integration of the major markets in the Central and Eastern Europe. The business environment of the European market creates good opportunities for many companies that want to expand their operations to this region (Jansson 2013). Allstar should therefore consider expanding its operations to Europe because of a higher competitive advantage that it is likely to enjoy in the region than in China and India.
For Allstar to successfully enter the European market, it must implement a number of strategic recommendations. According to Jansson (2013), companies that are willing to expand their businesses to international locations must first go through a gradual learning process. This learning process entails obtaining adequate knowledge on how to do business abroad (Meester 2008). The Board Executives of Allstar must understand that they will do well in Europe if they take their time to learn the conditions in the European market. The company must first learn about the culture of the European customers, the types of companies offering similar products and services in Europe, and the sales agents used by different companies.
Allstar needs to pay attention to the basic assumption of the internalization process theory which states that, knowledge acquisition is a continuous process that depends on the duration that a company takes in a foreign country. Jansson (2013), emphasizes that knowledge accumulation is important because it has direct relationship with risk management. In this respect, the nature of market knowledge that a company has determines the degree of uncertainty it has towards the foreign market. Leaders of Allstar must therefore take their time to understand the condition of the European market.
Most importantly, Allstar should understand the business laws and environmental regulations in Europe prior to beginning its operations in this region. Knowledge of the operational business laws and environmental regulations is one way through which Allstar can take care if legal and ethical issues that surround its operations in Europe. Normally, each and every country has legislations that govern business activities within their territories. The Board of Executives of Allstrar must understand that these variations can have an effect on the company’s business activities in the foreign market (Meester 2008).
Allstar should enter European market through strategic partnership, which involves forming an alliance with another company to formally participate in certain business activities. In a strategic partnership, each partner possesses business assets that will assist the other to do business. These assets may include either production facilities or a comprehensive knowledge of the European market. The partnership will help Allstar to reduce the burden that it may have when it wants to begin its operations in the European market for the first time. In addition, Allstar will benefit from the pieces of advice from its partner concerning the nature of the European market (Jansson 2013).
Another strategic recommendation for Allstar is to focus on the potential customer bearing in mind that it will be introducing its products into the European market for the first time (Meester 2008). The company should produce samples of its products and distribute them across Europe as a way of providing knowledge about its products. Allstar should also come up with methods of educating the market about the functions of its products and on the main reasons why customers should prefer its products to those produced by other companies. By educating the market, Allstar will be able to reduce risks for the customer. Moreover, Allstar should use international events such as seminars and trade shows to build awareness and establish a positive relationship with customers in the European market. The company should also organize personal meetings in order to develop a personal relationship with customers in the European market (Meester 2008).
Order Unique Answer Now