International Engineering Assignment
Heartbeat beat Pvt limited is planning to sell their products in Europe. They have many options to sell their products in Europe. The question before them is if they should manufacture the products in Europe and sell them in different areas of Europe or produce the products in Sydney and sell them in European Countries. Broadly the company can have four option of production and marketing of the product. All the options have some pros and cons which are to be evaluated with the help of the in depth analysis.
Evaluation of Options:
Option 1: Manufacturing of the product in Sydney and let foreign agents handle the marketing:
One of the biggest challenges to be handled by the company in this case is to compete with the current competitors of the HeartbeatBeat Pvt Limited. European manufacturers very well know the requirements of the European market and try to produce the quality that can be well accepted by the consumers there. GE is the biggest competitor of Heartbeat Beat pvt limited. It very important to consider the Strength and Weakness of GE before entering into the European Market:
Analysis of Competitor’s Strength and weaknesses:
GE is the international health device manufacturers in Europe, which have created the niche in the European market. With Carrefour on number two position followed by GE at number three in the country. Therefore it becomes imperative to know the strengths and weaknesses of the competitors. The below report will give the understanding of strengths and weaknesses of GE.
GE has many manufacturing units in Europe which just deal with health care devices. The total number of units are quite large in number. Following are the strengths of the GE.
GE has its own global communication system through which people can trace the sale of any item in the world. It has one of the best intranet systems in the world
GE has become a global giant, as it is opening production unit worldwide. It is expanding by opening new units and also by acquiring the other units.
These units produce products that offer very less price on the items and especially in some of the high demand areas, where the prices are lower than the cost price. This strategy has helped them a lot in gaining the customers.
Another strength is their people management, they keep the staff motivated at all times, this has happened because they do not consider their staff has subordinates but treat them as the associates of the company. They are producing the best quality products
Some of the weaknesses of GE are:
The company’s public relation is deteriorating; it has been criticized not only by the customers but also by the competitors. It is believed that GE discriminates in the job.
The company has given decision making powers to their managers, therefore, leaving the company in a chaos as each company in it is a mini corporation and since the centralization of the company is missing, it is difficult to manage such giant company.
GE focuses on different brands and products of health care therefore they are not able to give full concentration on one of the services. This act as a loop hole for the competitors for specific products.
The another problem with this type of strategy is that marketing cannot be completely left in the hands of European Agents. Marketing is an important tool that creates and sustains the demand of the product. European agents cannot be completely trusted when it comes to market the product. It is important for the company that it takes wise decisions regarding marketing of the product. (Hopkins , 2001)
Manufacture the product in Sydney but set up a wholly owned Subsidiary in Europe to handle marketing:
Now in this case the cost is a big constraint for the company. The company has to to bear a huge cost to open up a subsidiary in Europe and let them undertake the marketing of the product. Website marketing is the best option available to the company for the marketing of the product. Following can be a marketing option for the company.
The cost in the website redesigning is the most as the company needs to strongly build their new brand. Website is the most used source of buying a product or booking a product. Also the information about the devices is readily available. Below is the table that will show that how cost that will be incurred by the website marketing of the company. (Hopkins , 2001)
The objective of the website marketing is to appear on the international and regional medical and health sites, covey the message of the quality of service with a promise to deliver great products and services. This will be very helpful to the distributor of the products to track order online and deliver them at right places.
License the product to all European Companies and earning royalty:
This can be a good option for the company as it does not require much efforts towards setting up the production unit or setting up the right marketing department in Europe. Company can easily earn commission and royalties on the sale of the product. The only negative point of this strategy is that company might not be able to earn high profits as it can earn in case of setting up a direct production unit. (Chapman, 2003)
Political Considerations of Setting up the manufacturing unit in Europe :
The category is deals with the impact of Government policies on the growth and working of a particular organization.Government policies can have strong consequences on the working and trading of a business. Policies related to FDI will have an impact on the entry of the company into the European market. If policies turn out to be liberal then entry become easier. But in case of stringent FDI policies the entry of this company in the country will be tough. (Hopkins , 2001)
Foreign Direct Investment policies are liberal in Europe. The European government is open to the foreign investments in the country and also encourages the inward investment in the country. Europe is emerging as a third highest economic giant in the world, therefore it is important for them to have open hands for the investors from different countries. The FDI policies have made the companies invest in industrialization, services and also in technologies. This all is possible because the FDI regulations do not differentiate between the foreign investments when the policies were made. Also, it is one of the important policies of the government that they will not differentiate among the national and international investors. Therefore, this will make the country reachable for investments by foreign investors. (Dymsza , 2004)
Therefore, it will be easy for Heartbeat Pvt Limited to get into the market of Europe. With the help the FDI policies country will get international competitive among the firms and will also affect the economic growth of the country. (Dymsza , 2004) The FDI regulations are such that they allow the foreign investors and to encourage them they have incentives also for them, like, low tax for the investors. The broad objective of the country is to get the investors from around the world as it will increase the market share. Europe is termed as a developed country, because of the liberalization of foreign investment policies in the country. It has given a platform to lot of companies from around the world to invest and grow in the country. Apart from this, the government policies have also made the way for the foreign investors in Europe. Foreign investment in Europe is the destination for the foreign investors because of its large market, resources availability and the expanded industrializations. (Jorion, 2006)
The government laws and FDI regulations are quite liberal in the country except for investments in health, mass media and maritime. The FDI policies of allowing foreign investors in the country will not only increase the economy of the country but also the people of the country will be able to take the advantage of the same, as more job openings will be available for them. (Bonoma, 2004). So, politically it might not be that difficult to enter the European market and set up a manufacturing process there to increase the profitability of the company. But starting up the production unit in a new country is not that easy as it also has social and cultural effects. The government will surely take them into account before letting any foreign firm set up the production process in their country.
Social impact :
With Heartbeat Pvt Limited entering the market of company in Europe, the competition among the Health device market will get tougher. The effects will be both positive and negative. Some of the positive effects will be that the company will not only provide the better choice to its customers but also the working opportunities to the workers. Though they provide lot of job opportunities to the local people yet, it affects adversely to the people working and managing local companies, this will act as a negative effect. (Dymsza, 2004)
Hospitals might start purchasing devices from the new company and thus affecting the sales of the local companies. If the Heartbeat Pvt Limited will start its services in Europe, it will definitely give higher quality and choices to its clients and thus having a negative effect on the business of existing industries. Though it will give job to the people yet it will leave lot of people jobless or will ruin their local businesses. Another plus point in the favour of Heartbeat Pvt Limited is that it can even generate part time. The people who work don't only get the job but get immense amount of on the job training to meet the customer satisfaction. This will give the motivation to the workers to continue working. (Drummond, 2001). But if the employees taken are literate and have the knowledge about the product, the training will not help and motivate them. One thing is evident, if the Heartbeat Pvt Limited is allowed in the country, it is definitely going to create negative effect on local companies due to its high quality commitment and enthusiastic and energetic staff. (Drummond, 2001)
The Heartbeat Pvt Limited’s entry in the Europeian market will have both positive and negative cultural effects, which would decide whether the entry should be permitted or not. If we talk about the positive cultural impacts, they would include the great quality experience for its customers. People using the products and devices of Heartbeat Pvt Limited can experience great health benefits as the brand promises to maintain the quality to portray the brand image. (Arnold, 2006)
Now the negative effects that can be generated are that the loss of local values of culture. Since people will be more attracted towards the products from around the world, it is a possibility that local products are not taken into consideration, thus affecting the demand of the product. (Agrawal, 2005) If we talk about another positive effect is that, Heartbeat Pvt Limited is one of the few retailer that provide best health services and products at reasonable prices. The Heartbeat Pvt Limited will give them the opportunity to buy the best quality health product, which they might not be able to procure from the available companies. The Heartbeat Pvt Limited company will cater to the needs of all the clients in the country.(Agrawal, 2005)
Conclusion: After analysing the pros and cons of each option it can be analysed that every option has some negative and positive aspects. The best and safest option available to the company is the Option 2 which provides a good stream of income without much costs of advertisement. Company can also look for other options depending upon the requirements and goals of the company.
Agrawal, D. and Lal, R. (2005) ‘Contractual Arrangements in Franchising: An Empirical Investigation’, Journal of Marketing Research 32(3): 213–21
Arnold Heertje, (2006) "On Stackelberg’s oligopoly theory", Journal of Economic Studies, Vol. 23 Iss: 5/6, pp.48 - 57
Bonoma, T.V. (2004), Managing Marketing, The Free Press, New York, NY.
Chapman C, Ward S (2003). Project Risk Management: Processes. Techniques and Insights. 2nd ed. West Sussex. England
Drummond G. and Ensor J. (2001) Strategic Marketing: Planning and Control, Butterworth – Heinemann.
Dymsza, W.A. (2004), “Global strategic planning: a model development”, Journal of International Business Studies, Fall, pp. 169-83.
Hopkins, D.S. (2001), The Marketing Plan, Research Report No. 80, The Conference Board, New York, NY.
Jorion, Phillippe and Sarkis J. Khoury (2006), Financial Risk Management Domestic and International Dimensions, Blackwell Publishers, Cambridge, Massachusetts
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