Introduction
Bi-lens, a company incorporated in the United States of America where its headquarter lies, operates from the headquarters and has targeted markets all over the world.
The company’s products seem to have stronger market coverage in foreign markets as compared to the home market. The Bi – lens Company manufactures digital cameras for its customers. The company faces a strong competition from other companies within the same industry.
To continue its path along a successful operation, the company needs better strategies. This essay seeks to present a proposal of multi-assembly strategy, labor and compensation strategy, financial strategy and an analysis of the company using Michael porter five forces.
Entry/multi-assembly strategy
It is important for multinational companies to develop a good foreign market entry strategy. Foreign markets are different from the local ones based on politics, legal issues, social issues and cultural differences.
Political issues in a foreign country should be of great interest to a multinational business because changes in laws and regulations affect the performance and operation of a business.
For instance, if the Government of one of the European countries imposed a law that increases tax on imported goods, the company’s products would be a little bit more expensive. Higher product price is a weight felt by the customers.
That is, the customers would pay more for the cameras than usual. Based on the law of demand and supply, the products’ market demand would be less and Bi-lens would risk losing its customers to the competitors. Another tricky issue involving foreign market entry is the cultural and social life.
Culture defines the way people live in a society. Social activities on the other hand are based on the cultural dimensions like language and moral practices. Products whose consumption cause moral conflict in the society are not saleable.
Therefore, it is better to understand the moral practices of a particular target market in order to produce goods and services that are friendly to the market’s popular culture and conforms to customers’ moral practices.
A proposed foreign market entry strategy for the Bi -Lens Company would be assemblies. In this strategy, Bi-lens would locally production the parts of the digital camera and transports them into a foreign market to be assembled.
This strategy is suitable for the company because it is cost effective in matters related to transportation and custom tariffs.
The strategy will also enable the company to exploit local employment, which will facilitate foreign market penetration thus help overcome potential cultural and social obstacles like a different language.
This strategy will enhance the domestic firm’s full concentration on research activities that seek for product development and improvement of production skills. Assembling strategy restores all management voice with the domestic firm.
This will ensure that the share ownership lies entirely with the domestic firm thus facilitate quick decision-making.
Therefore, this strategy will bring a great success to the company because it is cost effective and needs less of the company’s attention thus more focus will be on product development (Tielmann, 2010).
Labor and compensation strategy
Labor is one of the most important factors of production. An employee of a company is the provider of this most important factor of production and therefore, is an important part of the company too.
They offer their time, skill and effort toward ensuring that a company’s plans and objectives are met. Therefore, for their dedication, time and skill, they are rewarded through wages and salaries.
Employees are the most difficult and more delicate part of a company thus should be handled with a lot of care. The whole idea of handling employees with care is to keep them happy.
A happy employee will dedicate full time and skills toward the production of quality products and better service delivery. It should be keenly noted that constant quality delivery is a key to attracting and maintaining customers. In addition to that, constant quality delivery is a core competence.
The second reason for keeping employees happy is to avoid moral-hazard related losses at work place. Cases like employee theft at work places are deterrence to achievement of organizational goals.
The third reason for keeping employees happy is to be able to obtain highly skilled labor force at a cheaper cost.
Employees would like to associate themselves with a company that takes good care of its employees therefore recruitment costs would be minimized because it would be easy to obtain employees.
To be able to keep employees happy, the company should provide a secure and free working environment and implement a lucrative remuneration plan. The concept a secure and free working environment would involve reducing or eliminating employee monitoring and inspection.
The introduction of inspection-free working environment makes employees feel like they own their job and are trusted. It is in that feeling where employees derive their freedom. A secure working environment would involve taking measures like implementing hazard control equipments.
For instance, installation of enough fire extinguishers to minimize fire damages. Another necessary security measure is the provision of protective gears like gloves and jumpsuits appropriate for various tasks if necessary.
Lastly, another security measure is to ensure availability of enough ventilation to avoid cases of suffocation (Glo-bus: Developing winning competitive strategies, 2013).
A compensation strategy would involve provision of a reasonable amount of wages and salaries matching with the level of service delivered or the quality of a product completed.
The company should introduce incentives like bonuses for higher work rates in order to encourage employees to complete more cameras.
The proposed labor and compensation strategy would ensure that the employees’ needs are taken into consideration thus would be a core competence (John & Allen, 1998).
Financial strategy
Every business idea remains an idea unless implemented. Implementation of the idea requires a large amount of money for setting up operations and implementing procurement plans. Bi-lens needs finance for both start up and continuation.
The company will have to prepare five-year forecasted figures of its financial statements like cash flow and profit and loss.
The significance of preparing the cash flow forecast is to be able to ascertain the operations that would bring in cash to the company and those that would take cash out. Cash flow forecasts should show periodic cash balances and cash flow patterns for the intended period.
It is from the forecasted cash flow that the business evaluates whether its operations would provide enough working capital for survival. Cash flow forecast enables the company to ascertain periods of peaks and troughs in the cash balance trend thus use the knowledge to plan borrowing.
The best source of a start up capital for the company is equity shares. The advantage of shares is that it is long term and is last to be paid in the event of liquidation. Borrowing would be another preferred source of finance suitable for expansion purposes.
Debt financing has different terms and conditions because unlike equity finance, it requires security. Potential lenders would require security just in case the company defaults on its obligations to repay the loan when due.
The lenders would want a quick look at the company’ s operations activities to ascertain whether it is capable of generating enough cash to facilitate the payment of interests and ultimately, the principle amount. This information would be obtained from the cash flow forecasts.
It would also be advisable for the company to prepare five-year profit and loss forecast to ascertain the level of profitability or loss. This information is needed to evaluate whether the company’s activities are beneficial or not.
Lastly, another cheaper and easily accessible source of finance is retained earnings. The business could use that source to finance its operations without incurring any cost (John & Allen, 1998).
Michael Porter’s five forces
The company faces stiff competition from five other companies in the same industry. Competition would bring a business down if not handled carefully. Within the industry that Bi-lens operates, sources of competition are rival firms producing similar products.
Rival firms are a competitive threat because they make strategies that are intended at countering those of Bi-lens. In that case, Bi-lens can only be successful if it implements strategies that would provide a competitive advantage over the plans of the competitors.
For instance, implementing better employee remuneration plans than the rival firms. The company should be keen on noticing any changes in the strategies used by the rival firms in order to implement a counter strategy.
Potential entry of new competitors
It is considered a threat if new firms would easily enter into the industry. The new entry would cause an increase in the competition among firms because the new entrant sometimes introduces higher quality products at lower prices compared to those of the existing firm.
The new entrants also come along with a substantial amount of marketing resources thus conquers the market faster. Bi-lens should therefore identify the new competitors entering the industry and keenly monitor their strategy in order to develop appropriate counter strategies.
For instance, developing a barrier to entry or a counter strategy would consist of building a strong brand preference and develop a strong customer loyalty through consistent provision of quality products that meet customers’ needs.
Potential development of substitute products
Bi-lens faces a strong competition from other firms that produce substitute products. Just for the sake of showing how it is a problem source, substitute products are those that can replace Bi-lens’ products.
Therefore, if customers like substitute products, Bi-lens would lose customers to its competitors. Bi-lens should monitor features of the substitute products and thereafter, produce those with better features in order to counter substitute products.
The bargaining power of suppliers
Bargaining power of suppliers influences the intensity of competition in an industry. Suppliers prefer firms that offer good prices for their supplies. For the sake of sustainable competition, Bi-lens should develop a loyal relationship with its suppliers by agreeing on a desirable supply price.
The bargaining power of consumers
It influences the level of competition in an industry. Bi-lens should offer other services like extended warranties and other special services to gain customer loyalty thus competitive advantage (John & Allen, 1998).
References
Glo-bus: Developing winning competitive strategies. (2013). Web.
John, R., & Allen, M. (1998). Global business strategy. London [u.a.]: Thomson.
Tielmann, V. (2010). Market Entry Strategies: International Marketing Management. München: GRIN Verlag GmbH.