Business Globalization: Dorchester, Inc. Proposal Essay

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Introduction

Dorchester, Inc has is one of the most successful electronic firms in the United States. The firm has plans to expand its operations to markets outside the United States through acquisition of successful firms in the targeted markets. This strategy may need heavy capital investment, but it is one of the best strategies of entering foreign markets. According to Eun and Resnick (2015), when planning to expand, the choice of the country selected matters a lot.

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The chosen country must have the capacity to sustain operations of the firm in terms of the purchasing power and population. The country must also be strategically located as to allow the firm to expand easily to the neighboring countries when the need arises. In this paper, the researcher seeks to identify three consumer electronics companies in three different countries which can be acquired by Dorchester as it seeks to globalize its operations.

Economic Assessment of the Country Chosen

The consumer electronics market has become very competitive due to the emergence of numerous firms offering similar products. Hubbard (2013) says that the relevance of electronic products to the well being of people in the modern society has made many firms to give this market segment a special focus. Dorchester Inc will, therefore, face some form of competition in any market that it chooses to enter. In this section, the researcher will conduct an economic assessment of the three host countries of the three companies selected.

The first company that this firm should consider acquiring is the Chinese-based Techno Mobiles. This Chinese firm has made successful entry into many markets in Africa and parts of Asia. The firm was chosen because of the attractiveness of China as a market that has huge potential. According to Cook (2016), China is home to about 1.3 billion people, making it the most populous country in the world. It is also the second largest economy after the United States.

Most of its citizens are in the middle class, which means that they have the capacity to purchase products that will be presented to them as long as the products meet their expectation.

Although it may be financially challenging to acquire this firm due to its impressive growth both within China and in other external markets, it offers the best opportunity for Dorchester Inc to achieve success in this region. Successful entry into Chinese market will also make it easier to enter the Indian market which has the second highest population in the world.

The second company that Dorchester should target is Epcos AG, a leading German electronics manufacturer. Europe is another target market that this American company should focus on, and the best way of doing this is to make a successful entry into Europe’s leading economy.

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Germany has experienced massive economic success, and the purchasing power of its citizens is one of the highest in the world. The country has experienced a long period of political stability, making it a reliable market for this foreign firm. The biggest challenge that Dorchester may face in acquiring this firm is the high price that will be demanded by the shareholders. Currently, the firm has 23,600 employees and its yearly revenue is estimated to be €1.8 billion (Cook, 2016).

The third company is Woodstock Electronics Limited which is based in Lagos, Nigeria. This firm is one of the leading consumer electronics distributors in West Africa. Nigeria is the leading economy in Africa and the seventh most populous nation in the world. A successful entry into this market will open avenues into other Africa continents. The main challenge that Dorchester may face is the low purchasing power of the locals compared to the U.S. citizens.

Risk Mitigation Plan

The management team will need to have a risk mitigation plan when making entry into these three countries. It may not be easy to precisely determine the risks that this firm will face in the new markets, but issues such as stiff competition, unfavorable legal system, possible political interference, and corruption are some of the expected risks.

Natural disasters may also strike, causing serious economic loss. Inasmuch as the firm will have insurance plans for some of these risks, it will be necessary to come up with a board that will be responsible for the risks which cannot be insured against.

Financing Plan on How to Finance the Acquisition

Acquiring these three firms will involve serious financial investment. Epcos Ag will be the most expensive firm to purchase because of its size and economic success. Techno Mobiles will also be relatively expensive. However, Woodstock Electronics will not be very expensive. The firm will have to rely on its revenues and loans from the financial institutions to finance its expansion projects.

Conclusion and Recommendation

The expansion strategy that is to be employed by Dorchester Inc promises to be successful if implemented properly. However, the strategy is capital intensive because it involves purchasing of already existing firm. The management should consider the following recommendations:

  • The company should acquire new firms at interval of 2-4 years to enable it recover from the financial shock that is expected
  • The expansion into a new market should only be made after a comprehensive market research.

References

Cook, A. (2016). Managing growth and expansion into global markets: Logistics, transportation, and distribution. Boca Raton: CRC Press.

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Eun, C., & Resnick, B. (2015). International financial management. Boston: McGraw-Hill Irwin.

Hubbard, N. (2013). Conquering global markets: Secrets from the world’s most successful multinationals. New York: Palgrave Macmillan.

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