Economic Issues
The economic issues that the company is likely to encounter in its global expansion are stiff competition especially on prices, seasonality issues, and high capital requirement. This calls for different strategies of entry into the market. In general, the goal is to seek mixed strategic alliance. The best option would be a strategic alliance with the goal of acquisition of a subsidiary.
The advantages of strategic alliances are significant not the least of which is the opportunity for even greater economies of scale. Mixed Strategic alliances are effective at managing uncertainty, risks, and sharing cost (Barney, 2007).
Before this strategy is implemented, there is need to conduct a marketing mix. An effective marketing mix ensures that goods are available to the target customer, when they need them and at an affordable price.
In France, before the company decides on the particular market, the first point is to collect adequate market data and analyze it. The company uses business intelligence tools to collect a wide range of data essential for its operations. Data is then interpolated in terms of age, sex, region, education, income, and lifestyle.
This assists the company in identifying the products that it will develop if it has to remain competitive. Its research centers offer great assistance in ensuring that all is set in terms of data availability for decision making.
The painting company will have global customers. To meet the special needs of global customers, it will have to hire, and assign global account managers based on industry. Global companies often have multiple needs. The global account manager will serve as the single point of contact for the client. Industries to target would be consumer sales companies for its products.
There are specific resources and methodology that are needed to attain the broader objectives of a company within a given market domain. A systematic plan of these requirements is all under the umbrella of strategic market planning. Price competition as it is evident in this case requires a strategic market plan to see the company through.
Competent distribution of available resources as the company adopts economies of scale is vital and any underlying intrigues need to be established in advance. There will be need to consider the overall market dynamics contrary to myopic orientation (Yip, 2003).
A strategic market plan will identify the right path as well as enlighten the company on the needs of the proposed market. It will also ascertain that the different departments within the company co-exist, coordinate, and work as a team in achieving the set goals. In due time, strategic market planning will assist in evaluating the SWOT analysis. Moreover, other optional lines of action can be explored through strategic market planning.
Political Issues
As Good earth coffee expands, into new territories, it has to expand its risk management and contingency plans to suit the local laws and conditions of France.
Most countries have similar laws when it comes to discrimination and ethical practices. France is a fast developing nation trying to implement and adhere to the same global policies. Some identified risks Good earth coffee needs to be aware of arise from the following:
- Discrimination lawsuits through employee malpractice,
- Corporate social responsibility issues, and
- Ethical dilemmas
The company could also face PR issues mostly arising from these malpractices. The procedure for handling these issues should be defined in the company’s Business Continuity Plan (BCP), which is a systematic strategy detailing how to mitigate those risks.
The risk in a leaning strategy is in determining which activities are not critical to the core competence of the firm. If a firm mistakenly cedes out crucial activities it can severely cripple its long-term strategy (Mintzberg, et al 2003).
The painting company will have to abide by all state and local laws and enact a complicit information security policy, which will encompass all their corporate culture as a whole and applied to all new locations.
Its risk management plan will have to include training sessions for all managers on good ethical decision-making. Management needs to be taught contingency plans for looming risky situations and the steps necessary to mitigate them.
Strategic Alliance and Riordan Manufacturing Company
Riordan manufacturing company was successful in its global expansion to Germany because of the strategic alliance it formed with Schneider Electric Motion Deutschland GmbH & Co KG, a manufacturer of electric motors; Riordan took a very strong first step in developing a marketing branding position for quality.
It’s important to note, Schneider has many locations throughout the world. A successful alliance with Schneider opened additional markets for Riordan. In point of fact, Schneider’s recent acquisition of Berger Lahr could open the door for Riordan to supply fans to the computer manufacturing industry. Schneider Electric now provides cooling solutions for IT equipment.
This strategic alliance has the capability of improving not only economies of scale, but also production efficiency, especially as it pertains to the supply chain for Riordan’s fan production. Schneider Electric can also be a significant partner in developing the efficiency of Riordan’s manufacturing operations because of its expertise in the manufacture of industrial electric motors.
Reference List
Barney, J. B. (2007). Gaining and Sustaining Competitive Advantage (3rd Ed.). New Jersey: Pearson-Prentice Hall
Mintzberg, H., et al. (2003). The Strategy Process: Concepts, Contexts, Cases (4th Ed.). New Jersey: Pearson-Prentice Hall.
Yip, G. S. (2003). Total Global Strategy II (2nd Ed.). New Jersey: Prentice Hall.