Written by M.Azim Ulfati

  Introduction

In this paper the main topic will be about Foreign Market Entry and Diversification of a  A Company and other companies. The first part is to create an argument for diversification of an A Company business that will be presented to the board of directors or business investors then I will develop a strategy for diversification indicating the products and industries for the diversification and how synergies may be gained from the diversified activity of A Company after that I will identify and discuss the foreign market that the company should enter and will discuss the strategy it should use to enter the market.  I will also discuss the challenges that company may face in the foreign market, and how it might respond strategically to minimize the impact of these challenges.

Further more I create a scenario when it would not make sense for the company to diversify or expand into a foreign market and will provide support for my rationale and lastly I will assess how the company that will create a business environment conducive to ethical behavior.

1-Create an argument for diversification of your business that will be presented to the board of directors or business investors. 

 A diversified company is a collection of various and individual businesses. This collection of businesses, whether related or unrelated, will cause the strategy- making and decision-making tasks for these collection and/ or groups of businesses to be even more complicated, important, and crucial than ever before ("Foreign market entry,”)

Diversification is a very essential and vital move for any business or company. A business must only know the need to diversify. It must also know of when to diversify.
So long as a company has its hands full attempting to capitalize on profitable growth
opportunities in its present company, there is no urgency to pursue diversification. The big risk of a single-business company, of course, is having all of the firm's eggs in one industry basket. If the demands for the industry’s product is eroded by the appearance of alternative technologies, substitute products, or fast-shifting buyer preferences, or if the industry becomes competitively unattractive and unprofitable, then company's prospects can quickly dim. ("Foreign market entry,”)
    Diversification is going to be the key to the longevity of our service and products in A. Its smallest competitors, Simply B offers World wide linguistic, intelligence and technical support while another largest competitor C, offer linguistic, intelligence, technical support; and have begun to offer minimal linguistic services. “Diversifying entrants pose a bigger threat in increasing rivalry and challenging incumbents’ market share. Right now, C is the leader in diversified product lines, although our competitors offer a variety of services and products. A Company will improve on quality in order to become a threat to the competitors. If A does not diversify, it will quickly become irrelevant in the market, like its smaller competitors. If it plans to succeed and increase longevity it must diversify and improve upon what its competitors offer.

Currently, A is the government’s leading provider of translators, interpreters and cultural advisors, with more than 8,000 personnel in 13 countries across the Middle East, Africa, Asia and Europe. In addition to language translation service, A provides intelligence support and training and technical solutions. ("Company,”)

            Its Service is inserted in a rapid change environment principally because of lightning fast technological development and advancement. In this environment the threat of product obsolescence drives company to improve present products and to develop new products to assure sales and profit stability. Therefore, as the language application life cycles are completed, new life curves with other applications must be started. Additionally the company is experiencing growth and effective use of new managerial techniques which facilitate the development of, and planning and control in, multiproduct and services.

            Due to the fact that A Services already has very high technological resources the company can use this expertise to leverage a cross-business value chain relationship strategy. With that strategy the company will diversify into related business with essential value chain, gaining more competitive advantage potential than companies that diversify into business whose value chains are totally unrelated. Then A Services could transfer skills and technology from the applications with languages to applications for another languages in general. In this way the company can reduce costs via sharing use of common facilities and resources, and utilizing the company’s well-known brand name and services and to grow services sales.

2-Develop A Strategy For Diversification Indicating The Products And Industries For The Diversification And How Synergies May Be Gained From The Diversified Activity.
    As a way to increase popularity and customer base loyalty, marketing, research and development will work with designers and distributors on a linguist, contractor employee line for plus capacity of the services. Currently capacity of service and finding the right and qualified human power in a specific field is difficult to find for working and deploying overseas and being a way from their family.

C is the leading company in providing human power services but that company provides human power at a high cost and they are extremely expensive for the clients to offer. Our A offers the best service in a reasonable price to the customers where they can afford and that have made it the global leading company and with that it vigorously executes specialized operational solutions to support the unique program management requirements of customers worldwide and the result create remarkable experiences and they have been very successful for development of their diversified strategy and activities that they offer.

3-Identify and discuss the foreign market that the company should enter and discuss the strategy it should use to enter the market.
Globalization has made the world flat where ideas, information, skills, and technology are being easily transferred across boarders. Such movement promotes companies from all over the world to enter new markets. Foreign market entry has become very popular over the years, and companies seek to enter such markets in order to achieve financial growth. Companies who are entering a foreign market undergo a complex process in order to penetrate the new market accurately. The company must have the opportunity, appropriate resources and skills, an adequate entry mode, and most importantly the right timing. Each of these factors mentioned above have to be chosen accurately in order for the company to successfully enter the new market.  (Jung, 2012)

And each of the above mentioned factors have been chosen accurately and it has been able to enter foreign market successfully.
When a company decides to become international, it must be careful in selecting when to enter the new foreign market. Timing is key. The organization has to take into account several factors regarding the market and the company itself. The foreign market must be ready for such investments; hence, the targeted industry must ensure opportunity and should contain the right settings to facilitate market entry (Jung, 2012). As previously mentioned, an organization needs certain resources to come into new marketplaces.   These resources can be described as technological, marketing, and financial resources. Also, organizations as a whole should be capable to undertake such action. With all of these factors taken into consideration, a company should be able to enter a foreign market efficiently and effectively. (Jung, 2012)
Once a company decides in entering a foreign; the organization must choose on an entry mode. Past research on entry...

Over the last decades, the world has increasingly become a smaller place offering more opportunities to potential and existing companies in terms of markets to explore. Barriers to trade have fallen, technologies have been improved, and these are only two of many more important factors that serve as incentives to internationalize, creating a favorable environment to get on board and start the process. Nevertheless, the decision to expand business activities to foreign markets is extremely complex. The initiative, to be fully rewarding, must be thoroughly planned and undertaken.

The strategy, which a company should use and enter the foreign market, is diversification strategy. Diversification is a set of strategies. These strategies involve all the dimensions of strategic involvement. It can include internal, external, related or unrelated, horizontal or vertical, and active or passive dimensions either singly or collectively.

Diversification involves a substantial change in the business definition singly or jointly in terms of customer functions, customer groups, or alternative technologies of one or more of a firm’s businesses.

There are different types of diversification strategies.

Concentric Diversification

When an organization takes up an activity in such a manner that it is related to the existing business definition of one or more of a firm’s businesses, either in terms of customer groups, customer’s functions or alternative technologies, it is called concentric diversification.

Concentric diversification is of three types:

Marketing related diversification

Technology related diversification

Marketing and technology related diversification

Marketing related concentric diversification:

A has considered all the above-mentioned strategy for entering foreign market so far successfully. Since its services are already in many different countries like the United States of America, Germany, Kuwait, Qatar, Kyrgyzstan, Afghanistan, Turkey and the company should enter in one of the other poor countries where the donor countries help a lot. There is the need for the international donor organization where many donor countries need linguists and contractors for the communication purposes. They need to use their multi national business strategy, where the company would vary a little in the company’s strategic approach in response to differing local market, competitive conditions and local preference. With the whole business based on online applications, by entering a foreign market, A has been able to coordinate activities across many different countries and should continue to coordinate their activities and build competitive advantage.

4-Discuss the challenges that company may face in the foreign market, and how it might respond strategically to minimize the impact of these challenges.

A operates in dynamic markets where the window of opportunity opens. Its survival and success is determined by how quickly, efficiently and holistically they predict and act upon foreign opportunities. How ever this company may face with some challenges like any other countries and I would like to talk more in details that not only A but also many other companies may face the following changes when doing business in foreign market.

1-Political Environment challenges

High levels of uncertainty in terms of continuity of government policies, changing political philosophies that may be evident in targeted market.

These uncertainties in political changes may include general instability, expropriation, operations’ and finance, Uncertainty about target’s value, Difficulty in “absorbing” acquired assets, Slower startup, High risk and high commitment.

2-Entry challenges,

In order to enter the foreign market it is very difficult to break in to a market and compete with other companies. There will be tariff and non- tariff challenges, Potential costs of trade barriers, Transportation cost, Foregoes potential location economies, Difficult to respond to customer needs well, Licensing agreement, Lack of control over operations, Difficulty in transferring tacit knowledge, Negotiation of a transfer price, Monitoring transfer outcome, Potential for creating a competitor

3-Legal environment challenges

The company may face legal environment challenges because the court law decisions may have upon a company’s globalization attempts. These cultural, political, geographical differences pose threats and challenges to global firms and as well as legal system and affect the business transaction. The environmental challenges can be the common law system, which is derived from English law and found in England, USA, British common wealth countries, which include for instance, Australia, Canada, New Zealand and the former British Colonies in Africa and India. The civil or code law system derived Roman law and found in most European nations, Japan and non- Islamic and non- Marxist countries. (Jusuf & JusuBiljanaf, 2011)

The Islamic legal system derived from the interpretation of the Holy Koran and followed by Afghanistan, Pakistan, Iran, Saudi Arabia, and other Islamic countries. (Jusuf & JusuBiljanaf, 2011)

The Marxist legal system, found in Marxist socialist countries such as Russia, the 
republics of the former Soviet Union, Eastern Europe and China, as well as other Marxist socialist states who rely on economic, political and social policies as the center of their legal systems (Jusuf & JusuBiljanaf, 2011)

4-Market Potential and Market Size challenges

5-Cultural challenges

Culture is considered among the most challenging aspects while selecting a market. Although language, different culture and preferences still have an impact because of company’s history and accelerated pace of internationalization and technology development the company faces more difficulties and more competition. I think that a successful marketer must be a student of culture because it deals with a group’s design for living and it is pertinent to the study of international marketing. Therefore, culture is integral to the marketing concept, which is based on satisfaction of wants and needs of potential buyers. Culture has also impacts on the way messages concerning the ability of the product or service to satisfy the needs and wants, are received and interpreted. This is even more so in international markets, where cultures differ markedly from one international market to another. When designing a product, style, and other related marketing activities, and if they are to be operative and meaningful, they have to be acceptable to the related cultural market. We can say that culture is very evident in all marketing activities, for example: in pricing, promotion, packaging, and styling. (Brakeman, H.G./Bell J.H.J./Penning’s)

6-Technological challenges,

Technology is vital for gaining a competitive advantage while competing in international markets, and is a major driver of globalization, because it allows companies to produce products or services more cheaply and with a better quality. (Jusuf & JusuBiljanaf, 2011)

Technologies may offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile telephones, etc. furthermore, technology help companies to better distribute and serve customers, for example: books via the Internet, flight tickets, online but some countries do not have good technology to do business online and run almost all of the business with the help and assistance of technology.

In order to respond the challenges in the foreign market and to minimize the impact of challenges in a company, then the company needs to do the following performances.

1-It is very important for companies whether in domestic or international, large or small, that want to conduct business without taking in consideration the political environment of the country where they intend to operate. An examination of target country’s political orientation and environment is part of the preliminary screening stage of market select. Any company considering doing business outside of their own country should carefully study the government structure of the target market as well as the political systems of the targeted country. (Jusuf & JusuBiljanaf, 2011)

Interest in politics is the first dimension listed in many frameworks examining export environments. This is largely due to the fact, foreign firms must try to make their activities politically acceptable or they may be subjected to politically condoned harassment (Jusuf & JusuBiljanaf, 2011)

Government involvements in business are related with making policies how best to promote the national interest. Any firm engaging in international marketing should also be aware of the importance of sovereignty to national governments and its consequences for global business (Jusuf & JusuBiljanaf, 2011).

Always asses the risk when selecting target markets because of high level of uncertainty in terms of government policies, changing political philosophies that are evident in targeted market It is extremely important for company while considering strategies to be used during internationalization stages to consider all aspects of political risks.

2- And in order to reduce the impact of entry challenges in a company, the company needs to obey the rules and well train and manage their staff to handle the entry challenges based on the tariff and non tariffs rules and regulations because usually entry rules and regulations are imposed by governments in order to protect domestic industry or to ensure that companies entering from foreign markets conform to trade relation’s arrangements with other countries.

3- when it comes to legal environment challenges, the company hast to study the legal environment rules and regulations of each country and environment, manage and follow them to the best of its knowledge and always consider international business due to the impacts that court of law decisions may have upon a company’s globalization attempts.

4-The company needs to asses foreign markets and do an estimation of international market potential constitute significant challenges that many internationalization companies have failed to meet.

5- The company needs to asses and be a ware of the cultural sensitivity and issues that are very sensitive to one’s culture and to accept the differences between cultures by assessing in an objective, not creating stereotyping. There are many numbers of cultural concepts that assist in clarifying cultures in broad terms like, religion, tradition time, language, space, and familiarity and consumption patterns.

6-Technology is vital for gaining a competitive advantage while competing in international markets, and is a major driver of globalization, because it allows companies to produce products or services more cheaply and with a better quality. As I mentioned above that some countries do not have good access with good technology or if they do they may have some limitation so the company has to assess the technological environment and consider alternative ways of approach where they can solve and minimize technological challenges. (Jusuf & JusuBiljanaf, 2011).

5-Create a scenario when it would not make sense for the company to diversify or expand into a foreign market. Provide support for your rationale. 

      There are seemingly three simple questions to be answered to find out whether it will make sense for the company to diversify or expand in to a foreign market or not. Expanding to other markets or diversification can be very challenging, unpredictable and a very high-stakes game, in fact there is little conventional wisdom to guide managers as they consider a move that could greatly increase shareholder value or seriously damage it. Although by expanding A Services to foreign markets the company might be able to enhance potential to build a global brand name with significant power in the marketplace, this scenario seems to be much more risky than diversification. In fact changes in foreign politics, taxations and increase competition can have dramatic consequences in the business, especially if the company is not prepared to spread the risk among other business.

        Therefore diversification seems to be the better strategy to achieve a sustainable advantage, which can result in the creation of enormous shareholder value. This is because A company strengths allow the company to create something unique. By identifying company’s unique and unassailable competitive strengths the company can move beyond a business-definition approach and instead launch a diversification effort based on its strategic assets. Every move makes sense for a rival or for the companies in the industries, it does not make sense for your own company or industry; the race to globalize sometimes leads people to overestimate the size of the prize. It is important to find out that are there potential benefits for our company? Do we have the necessary management skills? Will the cost outweigh the benefits? Considering A Company main strategy concerns “Language and technical services” the company can build on their excellent skills in technology and flexible payments to start new applications in language and launch similar applications for many other languages. In this way the company will not be so dependent of the one region language service and can consolidate their position in market before expanding into foreign markets.

The last things that the company needs to consider are to look carefully at its existing business. If the company does not have the right manager to cope with a divaricating strategy can not integrate the diversified business into one company or ring fence the new operations as a business in its own right, the organization is not strong enough to be an umbrella where its core values resonate across the group then it does not make any sense for the company to expand in to a foreign market.

6-Assess how the company will create a business environment conducive to ethical behavior.

I think ethical behavior in a business environment is extremely important and that is acting in ways consistent with what society and individuals typically think are good values. Ethical behavior tends to be good for business and involves demonstrating respect for key moral principles that include honesty, fairness, equality, dignity, diversity and individual rights and increasing consumer trust. However, the given nature of the activity in which the business is engaged would temper and define the outer limits of ethical behavior and the mode in which it manifests itself, on the part of business institutions and their managers. Even knowing that the company is inserted in a highly competitive industry, which it is also feasible to create greater opportunities for unethical behavior, the company must behave ethically.

But the question is how? Given the existence of opportunities in order to create a business environment conducive to ethical behavior the company must be engaged in ethical behavior in the marketplace and these attitudes must flow from the top level managers to the low level.  In fact, managers’ ethical values serve as example to influence each employee’s choice of ethical/unethical behavior, while corporate culture supports each decision as the right thing to do.

Additionally the company must develop a minimum level of ethical business conduct such as norms and minimal conduct behaviors. It must consider a business conduct for the organization to conform to the prevailing societal norms, traditions, and culture of the relevant environment especially if the company decides to expand into foreign markets. Finally to create a business environment conducive to ethical behavior it is necessary to extend higher ethical standards of fairness through the way the corporation and its managers interact with its stakeholders in Brazil or around the world.

Reference

1- (n.d.). Foreign market entry and diversification. Business and Management, Retrieved from http://www.termpaperwarehouse.com/essay-on/Foreign-Market-Entry-And-Diversificaion/135828

3- Jung, W. (2012). Foreign market entry essay. Retrieved from http://www.antiessays.com/free-essays/176825.html

4- Barkema, H.G./Bell J.H.J./Penning’s, M.J., Foreign Entry, Cultural Barriers and Learning, Strategic Management Journal, 17,2, 1996, pp. 151-166.

5- Jusuf, B., & JusuBiljanaf, A. (2011). Factors that influence entry mode choice in foreign markets. 5.4. Legal Environment, 22,

6-Jusuf, B., & JusuBiljanaf, A. (2011). Factors that influence entry mode choice in foreign markets. 5.7. Culture

7- Jusuf, B., & JusuBiljanaf, A. (2011). Factors that influence entry mode choice in foreign markets. 5.8. Technological Factor