Introduction
The success of PPQ Parts in investing globally depends on the effectiveness of its strategic plan. The plan acts as the company’s map of trade. It should incorporate an environmental scanning report of contemporary circumstances in the region of expansion, internal resource analysis, strategic goals, and analysis of the benefits and disadvantages for expansion in the chosen regions (Stair and Stair, 2006).
Environmental Scanning
Factors that determine the outcome of an environmental scanning include the economy, competition, and political stability. Others include social forces, technology and regulatory bodies. Notably, PPQ Parts need to analysis the status of these factors in the region. The customers’ expectations and spending habits can determine trading patterns in the region (Kamp, 2007).
The company, for example, cannot trade in pork or its products while expecting to win customers in Arabia. It is a business suicide to trade in the products in the region. In addition to the religious and social believes, the political climate plays similar roles. Politics defines, among others, channels of communication, viable businesses, and taxation policies.
For example, a change from labour to conservative government affects taxation and may result to increase in prices. International business regulatory bodies are at the fore-front of encouraging global trade. Governments are also increasingly signing trade agreements. These are beneficial for the success of international trade. However, a few countries still preserve the traditional trade restriction policies (Kamp, B. (2007). Some countries levy heavy taxes or impose quotas on foreign investors.
Additionally, the impact of technology is essential. Internet is making global trade easy to manage. The willingness of the locals to appreciate technology, however, has the potential of determining business success. PPQ Parts can trade in countries such as Germany or Japan with easiness. The countries boast of developed infrastructure and appreciate technology. Nevertheless, the development influences the establishment of strategic companies leading to unhealthy competition.
Internal Resource Analysis
Strengths and Opportunities
PPQ Parts has the necessary tangible and intangible resources. It also has the ability to manage the resources, especially locally. Currently, it has 5,000 employees in the United States. The company has an average profit barging of 6%. This is equal with the industry’s profit margin. PPQ Parts has experienced managers who understand the market. They have set to achieve 13% profit margin in 4 years, which is realizable. PPQ Parts has therefore has built a strong capital base in the United States. The resource it currently utilizes has helped it attain the profit margin of 6%. On the other hand, the company has weaknesses. It also faces threats and needs to address them.
Weaknesses and Threats
Particularity, PPQ Parts’ staff has little knowledge and experience in managing global businesses. It, therefore, must train them. Moreover, it needs to recruit 5, 000 new employees. The rate of employee turnover, which is an averagely 28%, further complicates the issues. It is higher than the industry’s turnover rate, which is 25%. The company should reduce the rate to save costs. Another challenge is the shortage of business facilities.
It needs to build 20% of these in the United States. The rest it should build in different countries. The management and financing of the project building project is expensive. Further, the company’s stock price of $10 is inadequate to raise the required funds. Moreover, PPQ Parts faces competition from firms that operate chain stores globally. The firms include Wal-Mart and Ford Motors. Strategic planning is of essence for the company to succeed (Bensoussan and Fleisher, 2008).
Short-Term and Long-Term Strategic Goals
Setting goals not only will help PPQ Parts to achieve its mission, but also surpass its target (Objectives and Goal Setting, n.d.). PPQ Parts has a broad mandate that should be converted into actions. The plans should either be long-term or short- term.
Short Term Goals
PPQ Parts should dedicate the first and second year of trade for infrastructural development. In the first year, it should build 25% of the required facilities and rent an equal number. It should use 10% of its revenue in paying the rent. The amount should however increase to 20% in the preceding year. The company should have built 25% of the trading facilities by the end of the first year and 50% by the end of second year.
Similarly, PPQ Parts should increase the number of employees in the same ratio. They should be trained prior to posting to respective areas of work. Besides, it should increase employees’ salaries to reduce labour turnover to from 28% to 17% or less annually. The company also needs to boost its charity work.
The established global competitors have built strong corporate values due to their effective corporate policies. The funding should increase to 1 percent of profits. It should allocate 0.5% of the allocation to the global customers’ kitty. It should also strive to formulate joint ventures to reduce the costs and strengthen its global presence.
Long Term Goals
At the beginning of the third year, PPQ Parts should have built a respectable global brand name. It should also have built offices in the first 10 countries in its implementation list. Further, it should have increased its presence online to attract and win more clients. During the period, it should begin giving out free samples and discount packages to brand loyal customers.
At beginning of the forth year, the company should reduce the rent payable to 5% of profits. Besides, construction of the remaining 10% of the facilities should be underway. The building project should be complete by the end of the forth year. Shortage of funds for accomplishing this should be addressed by borrowing from the Emergency Funds Account. In case there are inadequate funds in the kitty, the company shall take a loan from its main bank.
Location consideration
These projections can give profitable results. However, that is subject to the status of the business location. Income taxes and sales levies differ from state to state. Rent, economic policies, and employee education levels also differ from place to place. These are challenges for businesses. Depending on the demand, operation cost, and price of the goods, a trader may find an area either suitable or not (Choosing a Location for Your Business, n.d).
Other factors that define the suitability of a location are culture, infrastructure, and security. While there are areas where people are highly conservative and do not appreciate innovation and science, there are also places where the people are easier to relate with. Globalization has opened the space for communication therefore reducing impacts of conservative cultures. Trade agreements are likewise making international trade vastly realistic (Wheelen and Hunger, 2012).
Conclusion
PPQ Parts has outstanding strengths and the opportunity to invest globally. It has an established asset base and a management that understands the need for further training. The management also has valuable information that specialists can evaluate and present proficiently worked strategies. PPQ Parts therefore has the capacity to manage its threats and weakness.
References
Bensoussan, B. E., & Fleisher, C. S. (2008). Analysis without Paralysis: 10 Tools to Make Better Strategic Decisions. Upper Saddle River, N.J.: FT Press.
Choosing a Location for Your Business: There’s More to Consider Than Just Cost. (n.d.). About.com Entrepreneurs. Retrieved from https://www.thebalancesmb.com/choosing-a-location-for-your-business-1201032
Kamp, B. (2007). Location Behaviour and Relationship Stability in International Business Networks. London: Routledge.
Objectives and Goal Setting | MyStrategicPlan Resources. (n.d.). MyStrategicPlan | Strategic Planning Software. Retrieved from https://onstrategyhq.com/resources/objectives-and-goal-setting/
Stair, L. B., & Stair, L. (2006). Careers in Business (5th ed.). New York: McGraw- Hill.
Wheelen, T. L., & Hunger, J. D. (2012). Concepts in Strategic Management and Business Policy: Toward Global Sustainability (13th ed.). Upper Saddle, N.J.: Pearson Prentice Hall.