Wildbear is a manufacturing company that mainly deals in the production of mobile phones and accessories. The company has headquarters in Washington D.C, U.S.A and has recently established branches in some of the Asian countries. The rapidly growing company also deals in the production of other electronic devices like Radios and Television and is currently working on the modern technology devices like handheld computers, palmtops, and laptops.
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All the devices have a unique combination of rechargeable batteries and solar cells, and the user has the option of switching from one power source to the other. The modern ones also have several computer application tools incorporated in them. Technological advances is still a major factor considered in the management of operations at the in the company.
The proposed country
The management at the organization has opted to extend their operations beyond the U.S.A and Asian borders and is currently going for the other developing countries especially those in Africa and the Latin America. In Africa, WILDBEAR has sub-branches in Nigeria, Senegal, Democratic Republic of Congo, Chad, and Guinea. These are countries of western and central Africa. The company intends to invest in the eastern Africa as well and in particular, kit has chosen to establish its branch in Nairobi, Kenya.
Reasons for choosing Kenya as one of the host countries
Foreign investment had bad refutation for a very long period especially among the developing countries. However, due to the prevailing political and economic forces, it has since been accepted as an important tool in the growth and development of a country’s economy (Dunning 1972, p372). The World Trade Organization (WTO) has been in the forefront to help establish policies that encourage foreign investment, which was initially perceived as a way of transferring a country’s wealth to the docket of the other country.
Some of the features that attract foreign investment, and which attracted WILDBEAR to Kenya include availability of cheap labor, plenty of natural resources, good infrastructure, hospitality in the country, the excellent trade policies prevailing in the country, the market environment in the country, and the political stability that had prevailed in the country for a long time.
The above factors constitute what would be considered as the strengths and opportunities the company has and upon which the management would rely to ensure their success in the market.
Business plan of the wildbear
The use of modern technology devices is rapidly increasing due to the increased use of technology. The devices that have been in common use are mainly single-user with short-lived batteries. Others are not compatible with the modern operating systems. Devices then need to be manufactured that are efficient to the user in several dimensions.
They need to be user friendly, portable, energy saving, and have longer power supply owing to the beckoning international energy deficiency. The increasing need of a combination of such features prompted WILDBEAR to start manufacturing the devices, which it currently does. It intends to venture more into market research concerning the products.
Based on the market research that was conducting in October 2009 and based on the comparison with the statistics that had been recorded in the Democratic Republic of Congo (DRC), the company is set to sell 1.6 million mobile phones and 0.5 USB devices by the end of this financial year.
The other electronic devices, which the company does not intend to major in, showed a promising market as well. The total sales are expected to be about $200 million at the end of the year. If the same trend experienced in DRC is assumed, the total sales are projected to be about $1.5 billion by 2015.
WILDBEAR has the pride of dealing in products that are widely used across almost all groups of people. Almost everyone in the world can watch Television or listen to a radio. A good proportion of the world’s population including the illiterates and semi-literates can operate a mobile handset. Another increasing proportion of the population can operate a personal computer.
The main aim of the company was to produce devices that could take into account power failures that are often experienced mainly in the developing countries. The mobile phones have dual power supply that ensure security incase one goes off. Besides, the personal computers that the company is currently working have an in-built uninterrupted power supply (UPS).
This takes much longer (about three hours) than the traditional UPS that only allowed the user to save whatever document had been created. One can complete a task long after the power went off.
Mode of sales
The company has established the main retail store in Nairobi, the capital city of Kenya. It also has other branches in Kisumu and Mombasa, still in Kenya, and is set to establish other stores in the major towns. Sales are made to retailers at these levels with few cases of direct sales to the individual users. Other retail traders who cannot access our retail stores can access and the purchase the products online. We will transport the products to the location of the retailer on agreed terms and conditions.
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We are aware of the numerous companies that offer the products in this region. The major companies are Nokia, Motorola, Samsung, Siemens, L.G, Sony, Bird, and Alcatel among others. Most of these companies are old enough and have failed to advance with the technological growth that is experienced.
Some modern features that our products have are not found in the products of these companies. Besides, our products go at a relatively cheaper price than equivalent products from other companies. For instance, Nokia 2730 classic goes for about $100.
Our Wildbear C32, which has similar features and additional solar power supply, goes for about $75. We also offer a one-year warranty on all of our products. We have a customer-care call center at the head office that operates fulltime and which a customer can call for any inquiry.
The risk that we are likely to face is that of piracy. We are protected against this vice by the copyright policies in this country.
We listen to the opinions and suggestions that we receive from our potential customers on the kinds of products that we offer and we are sure we will do well in the region. The use of online purchasing services has and will continue to promote our sales. Customers can visit our site to access and order for our products.
We have also entered a business deal with Safaricom Company, a mobile service provider in the region, which will see our products dominate the market in the region. We also carry various sales promotions using the numerous media outlets.
With the plan of establishing 15 more retail centers by the end of the year, the company is set to reduce the transportation costs by about 25% down to approximately $15 million from the $20 million be used this year. The profits are expected to be $40 million (25%) at the end of the year and are expected to increase in the subsequent years.
Benefits and costs of the FDI to the host and home countries
Benefits to the host country
According to a 2002 report by the Organization for Economic and Co-operation Development (OECD), Foreign Direct Investment has several benefits to developing country (p6). The following are some the benefits:
- It enables the country to obtain foreign capital.
- Foreign Direct Investment also enables the host nation to acquire the modern technologies and skills that are necessary for the growth and development of an economy. The company has skilled work force from which the citizens can acquire the modern skills necessary for the industrialization of an economy. It thus serves to modernize the country (OECD, 2002, p.6).
- The investment also offers employment opportunities to the expatriates in the country who would rush to other countries in such of employment. It boosts the demand for skilled labor thus raising the wages for such skills (Wei & Balasubramanyam, 2004, p.18). It has thus improved the living standards in the host country.
- It also helps the country to feature in the international trade, a factor that would enable the country to attract more investors.
Costs to the host country
There is an important incentive in the Foreign Direct Investment that often poses threat to the success of any multinational enterprise. The concept of profit repatriation as it applies to Foreign Direct Investment has often been abused by certain governments. Profit repatriation requires that the organization or company that has a foreign investment return the profits and assets of their businesses back to the home country.
How the rules have been laid in a particular country will determine the attitudes of the investors towards foreign investment (Dunning 1974, p330). If the profits are poorly repatriated, then there will be payment imbalance that deters economic growth. According to Patil (n.d), an organization will stop its foreign investment if the overall return is not proportional to the input that has been used (para2).
Another possible challenge will be caused by over-reliance on foreign investors. This poses laxity on the technological invention and innovation by the locals. It is also seen as a ‘lose of political sovereignty’ (OECD 2002, p7).
Benefits to home countries
The home countries will benefit from the FDIs if they establish liberal repatriation rules and clear all the possible trade barriers. The foreign investments will increase the Gross Domestic Product of a country.
FDI also promotes international relations between the home country and the host country, which will encourage further investments (OECD 2002, p12).
Costs to the home country
There are no known challenges that this investment will pose on the economy of the United States.
The future of the wildbear
Economic indicators in the region show that the products of the company are likely to gain fame in the regional market. The country is currently developing with an increasing demand of the twenty-first century technology and the devices that can support such technology. The marketing strategies laid down both at the headquarter in the United States and by the management team at this establishment will see the company beat other competitors who have been deceived by their prolonged domination of the market.
Dunning, J. (1974). Economic analysis and the multinational enterprise. NY: Routledge. Web.
Organization for Economic and Co-operation Development. (2002). Foreign Direct investment for Development: Maximizing benefits and minimizing costs. Paris: OECD Publication Service. Web.
Patil, S. (N.d). Profit repatriation: the Foreign Direct Investment Incentive. Web.
Wei, Y. & Balasubramanyam, V. (2004). Foreign Direct Investment: Six-country case studies. Massachusetts: Edward Elgar Publishing. Web.