Good Example Of SWOT Analysis Research Proposal
International Expansion Strategy- B and B Corporation
a) Wide range of products:
The product catalogue of the company includes different categories of the company serving needs of different consumers of various ages and interests. For instance, the company produces adventure bikes priced at $16650 and also $300 commuter bikes with racer bikes, leisure bike and kids bike adding to the product category. Thus, with a diversified range of products to offer, it will be easy for the company to gain market share in offshore countries.
b) Health-friendly product:
Be it North America, Europe or Asia, the citizens of every country are turning more health conscious and are understanding the need of a healthy lifestyle. Thus, the product of the company is one that is in high demand and will probably be. Hence, the company can expect to achieve aggressive growth in the revenue figures provided the product adheres to the consumer of specific country.
c) Dominating market share:
Although new countries will impose new challengers for the company, but for a company which enjoys market share as high as 98.7% in native country, it can use the credentials to market itself in offshore countries.
d) Strong cash reserves:
Expansion to a new market in overseas country is a costly affair with heavy expenditure involved in various dimensions of the business. Hence, fully reliance on debt financing may turn risky as the outcome is not confirmed while the company enters in the new market. Thus, with cash reserves close to $125 Million, the company can be relived of any working capital crisis while it steps in the overseas markets.
a) High priced product:
Comparing the generalization trend, the price of the company’s product will be too high primarily for Asian markets. For Instance, in India and China, kids bicycle is available at a low price of $20-$50 while the market for adventure and racing bikes is not developed. Hence, offering products of such a high price range shall probably prove detrimental to the company’s success plan.
a) Future Demand for electric bicycles:
As per the recent report by Lucintel, a leading global management consulting and market research firm, while the bicycle industry is expected to grow moderately, the demand for electric bicycle will be at the top of the list of the consumers. While the report confirms this for North America and European region, the same can be expected for Asian markets too. Hence, gate-crushing the international markets with the launch of electric bicycles will be a great opportunity for the company to cash on.
a) Rivalry in overseas countries
Although the company is enjoying a dominating position in its domicile country, but the same cannot be assured as it extends its market overseas. In other words, it is most probable that the company have to face threat from the companies that are well established in their home country. Thus, if the company fails to beat the native competitors, it will have to face some undesirable results.
b) Existing Corporate Strategy
Considering the financial results of the company where it has a production capacity of 491500 bicycles, production utilization of 87.7% and market share of 98.7%, we believe that at present, the company is following value-creating corporate strategy. It is noteworthy to comment that under this type of corporate strategy, the company seeks to attain more market share in comparison to its competitors. The strategy to attain greater or maximum market share is achieved by exploiting the existing economies of scale present in the company, i.e. the resources and capabilities of the business that can be shared across the entire organization to reduce costs and increase efficiency. This allows the company to provide a diversified range of products to consumers at lowest possible price, thus dominating the overall market share.
Options to enter overseas market
The decision to expand the business activities to international market is a tough call and should not be taken overnight. Below are some of the options available with B and B Corporation as it plans to enter the overseas market:
Export: Being a manufacturer itself, the company can indulge into export of bicycles from USA to the targeted country. However, in such case, the company has to arrange new production facilities to increase the output.
Off-shore production: This is the second option available with the company. Assuming that the profit margins in overseas market are not suitable enough to the export from the home country, the company can plan to set-up a production unit in the targeted market. However, this will cost a lot to the company and any decision in this regard should be taken after foreseeing the effect on the capital structure.
Franchise/Licensed Sales: Under this option, the company can license the company in the targeted country to sell their product on commission or profit sharing basis. In this way, company can slowly and gradually increase its production capacity according to outcome of the international sales.
Cultural and Social Analysis:
Liberal mindset of the people
Growing preference for healthy lifestyle in the society
Rich in culture
Gap between higher and lower class
High consuming culture
Hereditary preference for bike riding because of traffic congestion
Rich and diverse culture as it welcomes maximum immigrants from the world
Growing preference for healthy lifestyle in the society
Considering the current financial position of the company and wide acceptance by US consumer, we believe that the company has a potential to expand its business to international arena and with global bicycle industry expected to achieve high business volumes and with growing preference of the consumers around the world for bicycles as mode of transportation because of increasing health consciousness and traffic congestions, we believe that with proper business plan development and execution, the company will be able to dominate the international markets also.
Considering all the factors, i.e. optimistic global factors for bicycle industry, strong financial standing of the company and existing dominating market share and brand name in the home country are the reason which we believe that the company should expand to international markets.
However, since it has multiple options available to enter the international market, we recommend that it should begin with the self-export as it is the most least expensive and low-risk option to enter the international market while other options such as setting up off-shore production facility or licensed sales have their own disadvantages.
Bradley, Jeremy. Types of Corporate Level Strategy. n.d. 2 February 2015 <http://smallbusiness.chron.com/types-corporate-level-strategy-60147.html>.
Five Steps To Expand Your Business Globally. n.d. 2 February 2015 <http://www.forbes.com/sites/theyec/2013/10/08/five-steps-to-expand-your-business-globally/>.
MAYRBEAR'S LAIR. A CULTURAL ANALYSIS OF THE UNITED STATES. 24 December 2012. 2 February 2015 <http://mayrsom.com/2012/12/24/a-cultural-analysis-of-the-united-states/>.
PEST Analysis of USA, the Largest Economy of the World. n.d. 2 February 2015 <http://pestleanalysis.com/pest-analysis-of-usa/>.
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