Foreign Market Entry and Diversification: Kinko's Printing Company - Essay Example

? Foreign Market Entry and Diversification Foreign Market Entry and Diversification An Argument for Diversification of Kinko's Printing Company It is important for Kinko’s Printing Company to diversify its operations based on a number of grounds. The company will be in a position to enhance or improve the rivalry of the entire industry. In case the company is successful, its value will improve in the long run. It is important for the company to create value through unrelated or related products given the revenues might be increased and the costs of operation minimized in line with the business level strategies. It is also vital to note that Kinko’s Printing Company has a lot to gain in terms of strengthening its foreign base and expanding the market. The Company should also execute its diversification strategy to acquire more competitive power comparative to their main rivals. The company might also desire to adopt a diversification strategy that is either neutral to value or one that leads to the company’s devaluation. The reason behind this is to neutralize the powers of the rivals in connection to market strength or to minimize the employment risk of the managers within the company. It is vital for Kinko’s Printing Company to consider diversification based on the need to improve the compensation of the managers due to the optimistic relation amid the size of the company, compensation and diversification. A Strategy for Diversification of the Company There are various foreign market entry strategies that Kinko’s Printing Company would take into consideration. The company would opt to have direct exports, indirect exports, contractual agreements, joint venture or having wholly owned subsidiaries in the foreign countries (Ahlstrom & Bruton, 2010). The company could also opt for licensing other businesses in the foreign nations to run a similar business or even use franchising methods. In this case the best entry mode would to have a joint venture. The main objective of this entry strategy is to distribute risk or share the available technology and to mutually conform to the regulations of the government. The joint venture would specifically concentrate on the technological sector or industry. Some of the main products that would be appropriate for the company to diversify would be 3D printing and 2D printing. The company stands to benefit various synergies such as operational and financial strategies on top of the sales synergies and management strategies. Most importantly, in regard to the operational synergies given that the company falls in the technological sector, the emphasis is found on the need to increase the competitive nature and the marketing strength of the products in the industry. There will be shared costs of operation provided there is full government support in the host nation. The Best Foreign Market for the Company The best foreign market the company should consider diversifying its operation through the joint venture would be South Africa. Doing business in South Africa is indeed favorable for technological firms given the numerous incentives provided by the state. A joint venture in South Africa is possible due to the structures laid down by the Department of Trade and Industry and the Economic Development Department and the Industrial Development Corporation (Paul & Kapoor, 2008). There are numerous government incentives inclusive of the tax breaks and grants which are easily manageable. The main objective is to encourage more private sector participation in the increase of the production capacity. In particular, the state incentives are majorly split into three classes: capital expenditure incentives given the desire to acquire and uplift the assets of the company with an aim to create or diversify the productive capacity of the business. Besides, the government offers development and research incentives for such companies as Kinko’s Printing Company that would enable the firm to design and improve the latest products and business processes. Last but very important, the state offers enhancement of the competitive incentives for ventures that promote the sustainability of the economic development and growth. Thus, the company stands to gain much from this initiative in the host nation. It must be noted that South Africa could create a good channel for distribution of services and products from the company once they are established in the continent of Africa. The Challenges that Company May Face in the Foreign Market There are various challenges that might be experienced by the Company while operating in the foreign country. Under particular circumstances the company may find it undesirable or very difficult to distribute the foreign markets from the local production sources. For instance, the costs of transportation might be too high for export of some bulky products such as the high processing printers and other related gadgets. Moreover, there are always risks related to the country and the political risks. The custom rates on imports might also render some of the products less competitive. The company has a duty to provide insurance for the products and its entire operation such as pre-negotiation international insurance covers to hedge against potential losses (Lymbersky, 2008). Even government might have intentions to have preferential treatment for local products and services, but the joint venture is enough to guarantee a smooth operation. Besides, making a decision to produce and distribute the products and services in the local country would be more relevant to gain the state favor in its choice of preferences. Above all, the commitment of the company is essential in obtaining an adequate operation. A Scenario When It Would Not Make Sense for the Company to Diversify or Expand Into a Foreign Market Whilst foreign venture diversification might seem to be prudent for the company, there are other probabilities or situations that would not guarantee its smooth operation and transition. As a matter of fact, South Africa of late has been experiencing a lot of upheavals in the mining sector, which makes the local citizens be less interested in the foreign firms. With the increasing risks, it would not be prudent for the company to get involved in the successful operation of its affairs. Besides, management of foreign exchange risks and the currency risks might in the long term lead to fluctuation of the portfolio in the short term (Peng, 2009). Assess How the Company Will Create a Business Environment Conducive to Ethical Behavior The company intends to create a business environment to ethical conduct through various ways such as job performance, customer service and employee interaction. Through the job performance, the company would make it its prerogative to maintain the ethical integrity in the manner in which the job is performed ethically. This comprises reporting facts and figures and working through a full shift time. Use of the right ethics such as fair treatment of employees can foster a work environment that is favorable to the ethical conduct such as avoiding the shortcuts to performing and achieving various goals (Jain & SARIMC, 2003). More ethical top management will translate to a lower management level and the entire organizational level. Customer service does count much to the interaction and relationship with the customers. The business needs to increase the honesty in its effectiveness and product features which count to the ethical integrity. The business needs to increase its service based employees by acting with integrity in upholding the job quality to the clients, which, in the event there is a conflict or misunderstanding among the workers, will prevent business collapse. This also translates to the interactions of the employees, which involve telling the truth and taking responsibility for the mistakes. Provision of a suitable work environment for the staff will improve the ethicality of the business operation. Taking accountability for the mistakes among the employees and services provided to the clients is a good sign for the business ethical conduct. References Ahlstrom, D., & Bruton, G. D. (2010). International management: Strategy and culture in the emerging world. Australia: South-Western Cengage Learning. Jain, S. C., & State of the Art of Research in International Marketing Conference (SARIMC). (2003). Handbook of research in international marketing. Cheltenham [u.a.]: Elgar. Lymbersky, C. (2008). Market entry strategies: Text, cases and readings in market entry management. Hamburg: Management Laboratory Press. Paul, J., & Kapoor, R. (2008). International marketing: Text and cases. New Delhi: Tata McGraw-Hill. Peng, M. W. (2009). Global strategy. Mason, Ohio: South-Western/Cengage Learning. Read More