Executive Summary: Key Goals and Objectives of the Research
The given paper is devoted to studying the key methods of promoting the Elite Company products in the Asian, European and American markets. Despite its success in its home market, the company clearly needs to expand and, therefore, has to define its key objectives and strategies in entirely new environments of the three markets in question.
Although each of the markets has its unique features, it can be assumed that, by creating a strong and cohesive strategy aimed at attracting more customers, as well as establishing reasonable and attainable objectives, Elite is going to succeed in each of the three markets.
The key goals of the given research, therefore, are locating Elite’s key strengths and weaknesses, setting the company’s objectives and choosing the strategies that will help Elite conquer the Asian, European and American markets.
It is especially important to make sure that the strategies chosen for Elite align with the demands of the customers from each of the three markets and make the company competitive compared to the major rivals in every target market.
Seeing how Elite’s mission is to keep in pace with the customers’ demands, the company will have to gear its strategies towards the specifics of each market and make sure that the technologies of the finest quality are utilized in the production process.
By introducing the objectives that will define the company’s further financial strategies and help the Elite Company provide its clients with the handsets of the best quality, the company leader will be capable of increasing the company’s net profits within a comparatively short amount of time.
Introduction: Situation Analysis. Elite within the Context of the Target Market
Elite is not the first company that came up with an idea to sell handset appliances; nor is it the leading firm in the given industry. However, the company does offer unique opportunities to its clients, such as the chances to acquire the products created in accordance with the highest standards and the latest technologies. Therefore, the quality standards of the products promoted by the company are quite high.
While the risks are much higher for selling handsets in Europe and the USA, it is important for a company to expand when the time comes. Seeing how Elite has already made an impressive start in the home market, it is time for the company to expand and integrate into the global market.
In addition, it is imperative for Elite to build more plants and use new technologies in the production process, which the Asian, European and American markets will help achieve.
Industry: handsets production and distribution within the context of Europe, Asia and the USA.
As it has been stressed above, the situation regarding handset appliances is different in each of the areas mentioned above. As a result, the company considers each of the markets from a different angle. While the American and Asian markets are viewed primarily as the locations for the plants to be built, the European market will be considered solely as the place for wholesale and retail business.
It is also remarkable that in the U.S. and European markets, features of the product in question are significant, while in the Asian market, customers are more concerned with the price of the goods. Consequently, the strategy for selling goods to each of the target customer groups will be based on the demands and preferences that the specified region is known for.
Competitive situation
The recent analysis of the U.S. research and development market has shown that the industry is dominated by iPhoenix, SoftTouch, TechMobile, HctPhones, L’Etoile and Mobile, Inc. (Cesim, n. d.). The Asian and European markets also have very recognizable brands.
It must be admitted that Elite will need a considerable effort to integrate into each of the three markets successfully and land at least in the top ten of the most successful handset devices producer and distributor. To conquer the market and beat its rivals, Elite will have to use the current competitive situation to the company’s advantage.
Competitive advantage
Elite’s competitive advantage can be defined by several key features of the company; however, primarily, the given factor concerns the fact that the firm is relatively young compared to the rest of the entrepreneurships.
On the one hand, the given factor can be seen as an obvious disadvantage, seeing how it presupposes a considerable lack of experience and, therefore, means that the company will be exposed to the risks of making a lot of mistakes. On the other hand, though, Elite has clearly very little to lose, seeing how it is only starting to gain recognition within the specified field.
Therefore, even after making several mistakes in its strategies or their implementation, the company will be able to get over a crisis caused by a wrong move relatively easy, unlike major companies, which are doubtlessly going to be crashed by a sudden crisis or the outcomes of a wrong decision. Therefore, the Elite Company’s competitive advantage concerns its openness to changes and improvement of product quality.
The Elite Company within the handsets production industry: potential and challenges
Much like its rivals, the Elite Company has a number of assets that it can utilize to its advantage. As it has been stressed above, the fact that the company lacks experience in working within the international setting and operating in the globalized environment will definitely have a couple of negative effects on Elite’s operations and especially the company’s financial transactions.
It would be wrong to assume that all of the expectations are going to be met in the course of implementing the strategies that will be provided below. Nevertheless, Elite has a great potential; therefore, further expansion is the only logical step in Elite’s evolution.
Past performances and three key ratios
According to the existing data, the company’s past performance is quite impressive. Elite managed to beat its rivals within its home market and advance far enough to enter the global economy stage.
Profitability ratio (Return on Equity Ratio, or ROE) is the first ratio to be used in the course of the research and the simulation. In contrast to the other significant ratio, EPS, ROE does not define the immediate profit; instead, it provides the data on the income that the company will gain in the long term.
Helping locate the data concerning the net equity on a particular fiscal year, 2014 in the given case, the ROE analysis will provide the information regarding the benefits that Elite will obtain from each of the markets under consideration. Therefore, an analysis of the Elite’s opportunities in each market becomes possible with the ROE evaluation (approximately 11%).
Next, to leverage ratios, it will be required to introduce the Debt Ratio (DR) and Net Debt to Equity Ratio, or gearing. Allowing for an analysis of the company’s assets and liabilities, the given data will help determine Elite’s possible losses and, therefore, is crucial for evaluating Elite’s chances for becoming competitive within the handset appliances market.
As long as the company’s DR is lower than 20%, rapid growth within the US, European and Asian markets can be expected, since the company’s profit is expected to be 20% at the very least. It is estimated that the company’s DR will be equal to approximately 15%.
Finally, it will be required to consider the Market Ratio, or Earnings per Share Ratio (EPS). The significance of the given ratio cannot be overestimated; knowing the EPS, it is possible to come up with a reasonable income statement and decide whether the strategies defined for the company’s further course are adequate to Elite’s needs and whether the company’s objectives are actually attainable. It is assumed that Elite’s EPS will be equal to $2.10.
SWOT analysis
Strengths
Despite its obvious lack of experience, Elite definitely has a number of strengths, its openness to innovations and changes being the key one.
Indeed, while the company’s inexperience regarding the financial operations within the realm of the globalized market does seem a major problem, the fact that the Elite Company does not have a major strategy makes it less dependable on, which all its financial transactions and choices are based on, makes the firm somewhat omnipotent within the target market in that Elite is actually free to bend and shape its strategy any way that the company leader wants without drastic consequences for the company and its revenues – the deviations from the traditional course will not affect the company’s revenues, because there is no traditional course to begin with.
In addition to the fact that the Elite Company is ready for significant changes in its business and financial strategies, the firm’s cost position deserves to be mentioned among its obvious strengths.
Although one might argue that the cost position only increased over time in each of the target markets, compared to the corresponding data regarding the company’s revenues, the given characteristics has been improved quite a few notches. For example, in the Asian market, the costs were reduced by 1,611.4% (from $418,964to $26,000), whereas the profit was dropped by 279% (from $66,142 to 23,650).
Despite the fact that the costs still remain higher than the income, the positive dynamics in the company’s financial transactions shows that Elite is on the right track. The same can be said about the European and the American markets.
According to the recent data, the costs and expenses total declined from $246,965 to$17,600 (1400%), while the profit dropped from $90,125 to –$17,179 (624%) for Elite in the European market.
Speaking of the company’s success in the USA, one should bring up the fact that the amount of total costs was raised by 7,183%, while the profit that the company made estimated 9,226%. With this information in mind, the company should, probably, explore the chances that the U.S. market opens for it.
Weaknesses
Unfortunately, most of the strengths mentioned above are balanced out by the company’s weaknesses, the lack of recognition being, perhaps, the key one. Indeed, unlike the rest of the companies, which, at the very least, have become quite recognizable brands, Elite is only starting to explore its potential as a member of the global market net. Hence, the lack of proper experience can be seen as a major drawback.
Another obvious feature that Elite will most likely have serious issues with concerns the fact that Elite needs to align its objectives in accordance with the demands of the target audience.
In other words, it is crucial that the company’s objectives should be suitable for the Asian, American and European markets at the same time. However, by getting its priorities in line and conducting a thorough analysis of the customers’ demands in each market, Elite will most probably succeed.
Opportunities
Elite will have a number of opportunities as long as the company gets its priorities straight. It is remarkable that, though the company clearly has very strong opponents, the past financial statement of the latter shows a rapid reduction of the total number of liabilities, with their last total number being lower than the previous one.
Therefore, it can be assumed that the Elite Company has impressive chances to increase its profit for the round, much like the US handset industry did previously, only making the retained earnings somewhat higher, which created pretty difficult environment for the industry to develop in because of the losses taken).
The same cannot be said about the Asian market, though; according to the annual balance sheet, the public enterprises controlling the industry of handset devices are doing not so good, with an impressive decrease in the operating profit and the profit for the year (a drop by $102,431) and a sharp decline in the profit for the year (from $77,814 to – $23,610).
One may assume that locating the company’s plants in Asia and the USA, while targeting at the Asian and European markets as the venues for trade seems reasonable.
The given choice was predetermined by the fact that the American and European states will provide sufficient resources of high quality, while Asia and Europe allow for vast and comparatively cheap promotion campaigns.However, by far the most impressive breakthrough concerns the situation within the European market.
While in the year prior to the company’s plans on extension, the participation in the European market brought mostly considerable reductions in the company’s revenues and nearly signified Elite’s end, the next year’s income statement showed that the company can, in fact, attract an impressive number of customers in Europe and even surpass the competitors, seeing how the income statement for the European market showed that Elite’s competitors gained a – $17,179 profit for the year previously.
Compared to the $90,125 that Elite’s rivals obtained in the same market the year prior, the given sum shows that they do have a very strong potential. The aforementioned fact that the rivals’ costs are rising in a geometrical progression gives reasons to assume that Elite has very strong chances of succeeding once attracting the potential customers.
Threats
Unfortunately, the company also faces a number of threats, the key one being the lack of information concerning the target market and the demands that its customers have for handset devices.
While the Elite Company has gathered admittedly large information concerning the net income of the U.S., European and Asian markets, according to the data acquired from the two previous years of the company’s experience, there is still very little data concerning what the customers actually want, which raises a few questions about the strategies that will have to be used to promote the product.
Therefore, the key threat associated with the financial position of the company is that Elite will not be able to coordinate its strategy and objectives with the current demand of the target markets.
The given threat, however, is relatively easy to tackle. By analyzing the handsets retail statistics within the specified regions, one will be able to come up with a cohesive and adequate plan concerning the future product line and the people whom it is going to target.
Significant issues to be faced
Like any other company, Elite is going to face several issues in introducing its product into the new markets, the first and the most important one concerning the probable cultural dissonance and complexities related to the promotion program.
The target audience is very different, with USA, Europe and Asia having their distinct cultural specifics that clearly need to be addressed when defining the firm’s strategy. Hence, Elite is most likely to bump into cultural barriers when offering its products to the specified regions.
Another obvious issue concerns the fact that Elite’s revenues grow much slower than its costs do. True, there is a positive tendency in the company’s financial state, yet the company’s profit for the year has been shrunken down considerably.
The changes in the Elite Company’s annual profit margins, which have been described above, are very impressive; however, unless the company maintains its tendency of profit increase and at the same time finds the way to cut the costs for its performance, Elite might fail to withstand the pressure of competition on the global level.
Strategic Plan: Using the Company’s Assets the Right Way
Mission statement: Elite, its key goals and the means to attain these goals.
Elite is one of the numerous companies that deal with producing and selling handsets. Elite strives to provide the customers with the handsets of the finest quality.
The firm manages to retain its customers and attract new ones, therefore, creating a base of loyal clients, by incorporating the policy of reasonable prices with the policy of maintaining high quality standards. What makes Elite special is the company’s attention to the customers’ needs and demands.
General strategy: Choosing the course of the company’s evolution
The company’s general strategy will be aimed at tying Elite’s objectives to the demands of the customers in three target markets. The given choice can be defined as strategic development and is used because of its immediate effect, which allows for capturing more new customers.
Long-range goals and objectives: What can be expected in the distant future. The method of balanced scorecard
Before going any further, it is necessary to stress that the objectives, which are going to be created for the Elite Company, are going to be based on the SMART principle.
Being targeted at five different aspects of an organization functioning at the same time, i.e., allowing for making the objectives more specific, introducing the means to measure them, making them more attainable and reasonable, as well as time-bound, is extremely important for a company to be able to link these objectives to the customers’ demands, which is exactly what the Elite Company needs at present.
Therefore, each of the company objectives listed below is also going to align with the key principles of the SMART methodology. Unless Elite creates the strategies that will provide a better connection to the target audience and understand the demands of the latter to promote customer satisfaction, the Elite Company may face the threat of failure. Elite’s financial objectives are:
- 15% increase in annual revenues;
- 3% increase annually in after-tax profits;
- Profit margins of 9%;
- 25% return on capital employed (ROCE);
- Sufficient internal cash flows to fund 100% of new capital investment
The company’s strategic objectives will include:
- Winning an 11% market share;
- Achieving a customer retention rate of 20%;
- Acquire 100,000 new customers;
- Reduce product defects to 5%;
- Introduction of 2 new products (new models of handsets) in the next three years.
First long-range goal: using the existing assets efficiently
First and foremost, it is crucial that Elite should be aware of the demands that customers pose to other companies providing handset devices within the American, Asian and European markets.
Although the key factors according to which the given products are evaluated in these markets are relatively similar, due to the specifics of each target audience’s culture, considerable variations in demands can be found when analyzing these demands within the environment of each market closer.
However, the given goal is only attainable once the company uses its potential to the maximum. Therefore, the first goal for the company to achieve concerns the use of the company’s assets. It will take approximately four years to achieve the given goal.
Second long-range goal: creating a base of loyal customers
As it has been stressed above, due to the fact that Elite is being targeted at three markets simultaneously it will be required to make sure that the Elite Company will have a base of loyal clients.
The given goal is only attainable, however, once the target markets are analyzed carefully and the demands of the customers are taken into account. As it has been noted above, the key problem that the Elite Company will most likely have in the course of integrating into the global market concerns the sampling procedures.
The given procedures are crucial in order to define the demands of the target audience and will be carried out as surveys and opinion polls, as well as the analyses of the market statistics.
According to the SMART objectives building principle, the given goal is quite specific, seeing how it addresses particular markets and specific target groups; in addition, it is quite attainable, since it presupposes gathering and analyzing information regarding the Asian, American and European markets.
It is quite reasonable, since the given objective leads to a better understanding of the functioning of the target market and helps tie the objective and the new company strategy together. Finally, by setting a specific time frame, for example, three weeks, Elite leader will make the given objective time-bound and, thus, aligning perfectly with the SMART principles.
First objective: defining the future costs in each of the markets
One of the most important tasks, counting the possible amount of losses will help the Elite Company define the potential total profit and, therefore, decide whether pursuing the given market is actually worth the while. It is crucial that the probing of the target market should be very quick and at the same time provide accurate results.
Analyzing the given objective from the perspective of the SMART principles, one will realize that it is rather specific, since it is aimed at particular markets and a defined audience (i.e., the Asian, American and European handset appliances markets and the people aged 18–65, who are most likely to be interested in the given type of products).
Speaking of the means to measure the given objective, one may suggest that the number of demands that can possibly be met divided by the total number of demands processed should be an adequate means to measure the results.
The given procedure is very reasonable, since it allows figuring out whether it is actually possible to succeed in the specified markets. Finally, in terms of time boundaries, the given objective cannot be considered time consuming, since the process of acquiring and processing the necessary information is going to take a week at the very most.
It is crucial that Elite should find out the details regarding the future costs for more reasons than the calculations of the money that will have to be used for promoting the company brand within the specified market.
Seeing how Elite already has several rivals within the context of the Asian, European and American markets, it will be reasonable to suggest that creating a unique strategy of taking less costs than any of the competitors will help Elite establish a strong influence in these markets and, thus, beat the rivals.
Second objective: increasing internal cash flows for funding capital investment
To define Elite’s value in the three markets mentioned above, it is imperative that the company should be able to increase its internal cash flow. The given step is crucial for having the funds for capital investment and, therefore, for a better control over the three markets in question.
It should be noted, though, that, in contrast to the rest of the objectives, the given one is linked directly to the company’s promotion campaign and reputation, since this objective presupposes a search for the company’s future investors.
There are several ways for Elite to increase its internal cash flow; however, by far the most efficient one is linked directly to the second goal of the Elite Company, i.e., attracting more customers. To make the company’s customers loyal, however, a specific strategy will be required.
To be more exact, it will be necessary to come up with a legend that will represent the company and its values and, thus, enable Elite to sell the customers not only the products, but also the legend behind them. Thus, Elite will have a particular group of the clients returning over and over again.
Another possible means to increase the company’s cash flow concerns the efficiency of the Elite Company’s transaction activities. When it comes to analyzing the strategies that average companies use for not only financial, but also the transactions regarding the informational technology sphere, especially the ones on information transfer and processing, an impressive range of costs is often revealed.
Therefore, it will be reasonable to consider the use of the company inventory in order figure out whether every single item is used to its full potential.
There is no need to stress the fact that the given objective is very specific; it is targeted at particular elements of the company’s operations, and for serious reasons. Speaking of the measurement of the progress after the given objective is met, one might suggest that the output–input ratio for every single inventory of the company should be calculated, with an average mean defined afterwards.
Although it is hard to predict the outcomes of the given step, seeing how it will take much time to evaluate the efficacy of the company’s inventory, it can be assumed that an average mean of 85% is going to be an acceptable threshold.
It should also be noted that the given objective is quite attainable, seeing how the subject of the changes and the reasons for the latter are clearly defined. It is assumed that the given objective will be met within two months.
Third objective: attract 12% of the target audience in the European, USA and Asian markets
The last, but definitely not the least, the need to attract more clientele into the company is clearly Elite’s key objective at present. In fact, the two objectives listed previously are merely the tools for attaining the third one. The more clients Elite has, the more chances it will have to surpass the competitors and the more opportunities it is going to enjoy in terms of expansion into the global market.
Analyzing the given objective in accordance with the SMART criteria, one should note that it is clearly very specific and quite measurable.
With an actual goal of 12% of the entire market to be attracted, there is no need to provide the exact number of customers, though; due to the possible changes within the handset appliances market, it will be required to conduct calculations on a regular basis to figure out the actual percentage of the Elite customers at a particular point of time.
The reasons for attracting 12% of the entire market are quite obvious – Elite needs to not only make a statement in the current handset appliances market, but also surpass the competitors. Since Elite has eight (8) competitors at present and is the ninth one, it is reasonable to assume that any number of customers that is higher than an average mean of customers per company (C1+C2+C3+C4+C5+C6+C7+C8+C9 / 100%, Cx amounting to 1 (one company), the result being roughly 11%) can be defined as a doubtless success.
Speaking of the time that the given process is bound to take, one must admit that Elite will have to be very patient. With all due respect to the idea of an effective introduction of the company with the help of a flashy promotion campaign, such methods will only help trigger customers’ interest, yet will hardly suffice to retain their attention.
A development of a smart and cohesive legend, on the contrary, must result in a consistent interest from the target audience, yet will require much time for the legend to be planted into the customers’ minds. The given objective is expected to be achieved within six months.
Projected operational plans: Defining the company’s strategy within the current market
Apart from coming up with long-term strategies related to Elite’s vision, it is also necessary to introduce the plans that can be used as guideline in taking the first steps in the new economic environment.
Production. What is going to be sold to the end customer: the legend behind the product
Speaking of the actual products, Elite is going to provide the traditional range of handset appliances, the inventory including handsets for phones and cordless (cellular) phone handsets. Defining the capacity of the handsets, one must mention that it is going to vary depending on the height above the ground; however, on average, the capacity is going to equal roughly 700–800 MHz to 2.3–2.6 GHz.
Finally, speaking of the R&D, it should be about 30% of the total shipped volume of the company’s productions at the very least. Elite will strive to reach the 50% R&D in two years.
It should be noted that the Elite Company is not going to deal with providing the phone connection services; the services that the company offers are restricted to the production, selling, installation and maintenance of the handsets.
The types of handsets, however, are going to be restricted to cell phones handsets, from traditional designs (for, Asia which is concerned with prices rather than with features) to innovative, risky and even somewhat surreal (for Europe and the USA, which demand innovative features and do not pay much attention to the company’s pricing policy).
It is planned that the latter should get a very huge and convincing promotion in Japan, seeing how it is in the culture of the Europeans and Americans to enjoy the unusual and the innovative, while Asian people tend to rely mostly on the price and long shelf life of the product. Outsourcing will also be used as one of the company’s key strategies, though for a relatively short period.
Distributing will be delegated to the subsidiary departments in Europe, Asia and the USA. Finally, speaking of inventory, the company plans on acquiring more advanced equipment; the emphasis, however, will be put onto the promotion strategies.
Marketing: appealing to the target audience the right way
As it has been stressed above, it is crucial that, in contrast to other companies involved into the handset retail business in Asia, USA and Europe, Elite should not merely sell phones and other handset devices, but also create a legend behind its products in order to help customers relate to this legend and feel that the Elite Company will help them change their life for the better.
The given effect can be achieved by introducing such a legend as Elite giving its customers an opportunity to keep in touch with the people who are really close to them. The idea of using family values as the basis for the company legend is not new, yet very efficient.
While other important points concerning handset appliances, including the necessity to keep in touch with business partners, etc., are also very legitimate, they do not address the customers’ emotions, unlike the one that considers a family as a priority.
It should be noted, though, that the given legend will be applicable only in the United States and Europe, where, according to surveys, product features are essential and, therefore, the legend that they are based on is crucial.
To address the needs of the Asian customers, it will be required to come up with a flexible pricing policy and the legend concerning the company’s understanding of clients’ need to save money when buying handset tools. In the case of the Asian market, the legend should be also based on the family values and the necessity to maintain constant contact with relatives; the emphasis, however, will be put on the affordable prices of Elite.
Elite plans to promote its products to the Asian, American and European customers via television commercials, street (billboard and public transport) advertisements and online commercials. Speaking of the latter, it is imperative to use social networking as the cheapest and by far the most efficient way of raising awareness about the company, its products, mission and values.
Such social networks as Facebook (USA and Europe) and AsiaRoom (Asia) will help boost the company’s sales greatly. The total amount of money that is planned to be spent on advertising will be restricted to $75,000; around $30,000 will be spent on online advertisements, while the rest ($45,000) will be used for public advertising and TV commercials.
Finance: risks, challenges and opportunities
Naturally, the Elite Company is going to face a number of risks in its new venture when targeting completely new markets. As it has been emphasized above, the key obstacles that the company is expected to bump into are related to the cultural issues and the difference in marketing strategies. However, capital building exercises and dividends planning must be considered as Elite’s top priority at present.
Obtaining initial capital is not an easy task, especially for a company that is going to take a relatively risky step and enter three completely different markets. Supposedly the Elite Company can obtain the initial capital by reconsidering its pricing policy and cutting some of the costs, such as the costs for internal logistics.
In addition, Elite can also take a bank loan from a trustworthy bank and use this money to come up with decent promotion campaigns in each of the three markets specified.
While the given strategy is quite legitimate for the debt policy of the capital funding strategy, the policy regarding the equity (stock) capital should be based mostly on the money obtained from cost reductions made by the company, since such policy will help the company become less financially dependent on its sponsors.
As the previous suggestion says, the equity capital can be created by reducing the costs for transportation, as well as the major transactions carried out within the company. It should be noted, though, that the latter strategy may result in slight drops of the product quality.
Conclusion: Fighting Future Challenges and Facing Tough Competition
Entering the globalized market is an extremely hard task, and Elite will definitely bump into a number of obstacles on its way to the global integration. Therefore, the company’s strategies within the context of the European, American and Asian markets must gear towards providing customer satisfaction and meeting the quality and usability requirements posed by the customers in Europe, USA and Asia.
While designing the strategies that will be linked directly to the customer demand does not seem to be a problem, the financial issues might cause slight concerns; primarily, the initial capital and the issues regarding the company’s financial strategy within the new markets may raise some concerns.
However, by composing a list of strategies that are linked directly to the company’s assets and the advantages that Elite has compared to the rest of the competitors, one may assume that the company will win the fight for the title of the most influential handset firm in Europe, Asia and USA.
Reference List
Cesim (n. d.). Mobilé Inc– case company description. 1–4. Web.