At a time when business operations are shifting towards attaining a global outlook, an effective understanding of both opportunities and threats is crucial (Ahenkora & Peasah, 2011).
The main reason for the expansion of XYZ to Turkey is the desire to improve productivity and profitability of the company amidst the challenging business environment across the globe. The company is also keen to meet the growing demand for its products in Turkey.
XYZ is a manufacturing company with its headquarters in Houston, Texas. Since its establishment way back in 1984, the company has continued to grow consistently.
So far, it boasts of over 59 branches throughout the United States. There are also other additional operating units in the European Union, Canada, Caribbean and Australia (Winer, 2009). Such a successful expansion to overseas markets explains why the company should extend its business to Turkey.
The mode of entry into turkey will be through equity-based joint venture. In other words, the management of the company will seek local business partners in Turkey who can agree for a merger plan.
If the merger plan will be successful, it will indeed expand the company’s sale due to access to technology, operating space in the foreign market and vibrant distribution channels.
Ahenkora and Peasah (2011) observe that businesses that expand to unique geographical environments often face numerous risks. However, the prevailing risks can be avoided by developing a contingency and cost saving plan. Partnerships with local companies will be one of the methods of acquiring resources.
In order to minimize the possible risks, the XYZ Company will insure its entities and operations with reliable insurance companies in the market (Daniels, Radebaugh & Sullivan, 2015).
Business barriers often vary in different locations. A number of barriers coupled with aspects such as political and economical climate will determine the overall operational platform and wellbeing of the company in the overseas location.
Before expanding to Turkey, it is imperative for the management at XYZ to carry out a thorough pilot study of the market. According to Ahenkora and Peasah (2011), the cultural environment of Turkey is quite distinct from that in the United States.
It is obvious that the cultural business environment in Turkey is strongly tied to religion, traditions and economic demands among other socio-political and economic issues. Both political and economic barriers are anticipated in Turkey.
Effective management of the above barriers will demand a number of key considerations.
To begin with, it is clear that in order to mitigate against challenges such as social customs, religion and political orientation, it is crucial to master and internalize their demands and orientation towards effective integration of new objectives of the expansion (Daniels et al., 2015).
It is also important to note that understanding the economic effects of expanding to Turkey is essential in meeting the growth objectives of the XYZ Company. For example, the management should consider the demand level of its products in the new market.
The latter will determine the volume of production at any given time. In addition, the selection and hiring processes for employees in Turkey should be carried out with extra caution.
As a matter of fact, the company should make sure that it unionizes its workers without being compelled to do so by the authorities. There is a promising future in Turkey as an investment ground.
References
Ahenkora, K. & Peasah O. (2011). Crafting strategy that measures up, International Journal of Business and Management, 6(10), 278-283.
Daniels, J. D., Radebaugh, L. H., & Sullivan, D. P. (2015). International business: Environments and operations. Upper Saddle River, NJ: Pearson Education.
Winer, R. S. (2009). New communications approaches in marketing: issues and research directions, Journal of Interactive Marketing, 23(2), 108-117.