Expanding a certain business and strengthening sales positions in new locations are the goals that many companies adhere. The possibility of growing opportunities through product introduction in the international arena opens up substantial prospects, implying high incomes and consumer recognition. However, the expansion may be associated with certain difficulties that often arise due to the characteristics of a particular geographic region, its traditions, and the perception of new market participants. Based on the analysis of the activities of Flyboy, Inc., the American aircraft manufacturer, it is possible to trace the features of product introduction into a new geographic region.
The object is the kingdom of Pamonia where the monarchical type of government prevails and the traditional principles of trade are maintained. The introduction of Flyboy’s products here may be accompanied by specific challenges, and this report is aimed at identifying the pros and cons of entering the Pamonian market, assessing legal risks, and finding safety strategies. As a justification base, relevant academic sources will be used. The analysis will allow making a safety plan for expanding Flyboy’s business in Pamonia and establishing mutually beneficial partnerships in a new market environment.
Pros and Cons of Entering the Pamonian Market
Entering a new market, as a rule, is accompanied by drawing up a plan implying the assessment of local business characteristics and consumer preferences. Therefore, the evaluation of the effectiveness of Flyboy’s products introduction should be carried out on the basis of these criteria. The mechanism of cooperation has some advantages and disadvantages that can have a significant impact on the success of the partnership and the possibility of business development in this region in the future.
When giving the examples of the advantages of establishing mutually beneficial cooperation with the kingdom of Pamonia, it is crucial to take into account the nature of its governing and structural particularities. Due to the fact that most buyers of aircraft equipment are the members of the authorities, the security of sales is ensured. The risks of fraud are minimized since the prevailing percentage of customers is officials, which helps to avoid fraud.
Since Pamonia is a former Italian colony, the civilized principles of European trade are certainly maintained here. Moreover, the kingdom is developing through the extraction and processing of oil, which is one of the most sought-after industries and forms a stable market background. Piwek and Wiśniowski (2016) cite the program Flight Path 2050 that regulates the development of the aviation industry in the European region and argue that compliance with social and market trends is manufacturers’ key task. Consequently, a large number of negotiations and international contacts maintained in Pamonia require high-quality transport services that Flyboy can offer.
Another potential advantage of introducing new aircraft products into Pamonia is the possibility of strengthening the competitiveness of the company. Since government members and some individuals use the services of other transport providers, Flyboy may have positive prospects for building mutually beneficial partnerships by providing more favorable conditions. As Skilton and Bernardes (2015) note, “competition is an important motive for product market entry,” and in case of a competent implementation policy, preferences may be given to the company whose services are more accessible (p. 1689).
Due to the fact that today, the representatives of the governing elite make up the majority of aircraft buyers, and a small percentage are private families, the new terms of cooperation can expand the range of sales. A properly thought-out pricing policy may help increase the number of customers, which will be beneficial for both parties and can facilitate sales at a fast pace.
Nevertheless, entering the market of Pamonia can be accompanied by difficulties, and the negative aspects of such an introduction can manifest themselves. For instance, the practice of generous gifts to customers, involving additional costs, may be associated with corrupt policies. This, in turn, is fraught with external checks and sanctions, which is unacceptable for Flyboy’s reputation. According to Roca, Vaishnav, Morgan, Mendonça, and Fuchs (2017), “airlines operating costs” may be increased significantly at the expense of additional financial investments, and in the context of a developing company with a limited budget, these manipulations may be unprofitable (p. 1219). Another potentially negative aspect is the need to find a local representative.
The monarchical principle of power in the kingdom does not provide for free market relationships, which imposes certain obligations on foreign companies that plan to introduce their business. Therefore, even if cooperation conditions will be beneficial for both parties, it does not mean that the ruling elites will approve the emergence of a new market participant that will monopolize a separate industry.
Legal Risks Inherent in the Proposed Investment
In addition to ambiguous market prospects for the implementation of Flyboy’s business in Pamonia, some legal challenges may arise. The internal structure of the kingdom implies strict adherence to national traditions and regulations that do not provide for free and uncontrolled trade relationships. Consequently, in case of an attempt to establish partnership contacts, the internal laws of Pamonia may forbid Flyboy to implement its plan due to the prohibition of cooperation with the representatives of the American aircraft industry.
McGuire and Islam (2015) argue that supply chains can be significantly complicated due to pressure from authorities. In the case of Pamonia, the prevailing clients are the members of the ruling elites, which, nevertheless, does not guarantee that they will meet all legal conventions in exchange for working with an untested partner.
Legal risks for the investment plan under consideration may also be associated with “maintaining and extending industrial leadership” in the kingdom (Piwek & Wiśniowski, 2016, p. 341). In case Pamonia’s legislation does not give Flyboy’s trustees an opportunity to conduct business activities in the kingdom’s territory, it will not allow controlling all the areas of activity comprehensively. Moreover, the lack of regional representation is fraught with financial losses due to an inability to establish an appropriate accounting background.
Economic challenges complicated by legal conventions are barriers to creating a favorable business environment. Nevertheless, the impact on the local authorities through external pressure is unlikely since the legislation of Pamonia and its traditions are enshrined in official royal statutes, which makes the territory inviolable and independent. Therefore, finding relevant methods that may help to avoid potential legal risks is a crucial task for Flyboy’s US office.
Ways of Avoiding Risks
Minimizing the legal risks of building mutually beneficial partnerships with Pamonia can be based on those practices that involve professional marketing specialists’ help. For instance, according to Cai and Raju (2016), when entering a new market, any company faces competitors’ activities, and the fight against them becomes part of a strategic development course. Consequently, in order to prevent third parties from intervening and, at the same time, to convince the Pamonian government of full legitimacy and security of cooperation, appropriate methods of countering competitors should be developed.
Local traditions maintained in the kingdom may imply antitrust policies as one of the market elements. Therefore, objective and effective measures aimed at promoting Flyboy among the ruling elites are necessary, and the task of drawing up a special working plan may be assigned to professional marketers. In accordance with the aforementioned principle of customer grants, the company can offer bonuses, for example, bulk purchases. Such a measure may have several positive implications, in particular, entering a new market successfully and eliminating competitors.
The solution to the challenge of the implementation of Flyboy’s trustees in Pamonia can be based on the practice of sharing experience. In case the representatives of the kingdom authorities will be against locating the company’s branches within the country, an exchange program may be offered to them. The members of noble families and other members of the ruling elites who are interested in maintaining contacts with American business markets can receive jobs in the US office where they will be provided with all the necessary conditions.
Accordingly, Flyboy’s members will be sent to Pamonia to regulate essential working procedures. This practice may be successful since the development of a new market implies not only favorable financial conditions but also the possibility of mutual experience exchange. Therefore, such an approach to solving the issue of trustees’ non-admission can justify itself.
Conclusion
When summing up the aforementioned facts and assumptions, it can be concluded that establishing mutually beneficial partnership relationships between Flyboy and the kingdom of Pamonia is possible in case of the creation of a special safety plan that provides for eliminating legal risks and developing policies to combat competitors. Despite some negative aspects of such business expansion, the merits of competent implementation prevail. As a strategically important measure, an exchange program may be offered to the members of the Pamonian ruling elites to convince the local government of Flyboy’s serious intentions and the legality of all the business plans introduced.
References
Cai, C. J., & Raju, J. S. (2016). Keeping your enemies closer: When market entry as an alliance with your competitor makes sense. Marketing Science, 35(5), 743-755. Web.
McGuire, S., & Islam, N. (2015). Indigenous technological capabilities, emerging market firms and the aerospace industry. Technology Analysis & Strategic Management, 27(7), 739-758. Web.
Piwek, K., & Wiśniowski, W. (2016). Small air transport aircraft entry requirements evoked by FlightPath 2050. Aircraft Engineering and Aerospace Technology, 88(2), 341-347. Web.
Roca, J. B., Vaishnav, P., Morgan, M. G., Mendonça, J., & Fuchs, E. (2017). When risks cannot be seen: Regulating uncertainty in emerging technologies. Research Policy, 46(7), 1215-1233. Web.
Skilton, P. F., & Bernardes, E. (2015). Competition network structure and product market entry. Strategic Management Journal, 36(11), 1688-1696. Web.