ER3S72 - Global Business
Form of FDI
Elecdyne is a Japanese SME, based in Tokyo, which started in 1990. Having grown from five workers initially, it now employs 100 staff, producing a range of electronic products using technology licensed from a number of multinationals.
Currently Elecdyne only supplies to the Japanese market and only purchases from local suppliers in and around Tokyo. Elecdyne had initial success in competing on price, however it has failed to grow its sales and is facing its first loss due to its need to pay for licences, its high wage rates and decline in sales.
The reason for the decline due to the global competitive strength of Japanese manufacturers starting to weaken due to an increase in competition and the rising expenses of making products in Japan (www.factsanddetails.com/japan, 2011). “Japanese companies are finding it hard to compete against lower-priced rivals from Europe and Country 3, and in recent years competition has become so fierce in the electronic industry” (www.factsanddetails.com/japan, 2011). These factors are adding to the reasons behind Elecdyne facing its first loss in profit.
Elecdyne as a company has never had contact with overseas markets. The management team are now contemplating the possibility of internationalisation and their debates over suitable countries to locate / sell in revolve around their three most important requirements: * access to cheap labour
* new innovations and technologies
* better markets in which to compete
The three countries that Elecdyne are looking at internationalise into are the Country 1,2 and 3, as it is believed that the Country 1 will provide better competitive markets, Country 2 will provide new innovations and Country 3 will provide cheap labour.
This report is going to present the information collected on the above issues which will affect Elecdyne and their plans to internationalise the company. The information will then be analyzed and a decision will be made on which country Elecdyne should enter. The best route for entry into the chosen country will be identified and a strategy will be presented.
In order to analyse the situation for Elecdyne, a STEEP table has been produced as it is inexpensive and adequate at this preliminary stage. The STEEP table will also assist Elecdyne to detect the trends in the external environment that will affect the competitive environment in which it competes (Henry, 2008:51).
| Social Media “development of new social networks like Facebook or Twitter ,firms should not delay in efforts to take advantage as a great way to boost image and increase effectiveness” (Lesonsky, 2010),Travel and tourism “creates many new opportunities and increases sales in markets such as GPS gadgets, travel applications” (Wang and Ohngren, 2010)Ageing population “triggered boom in specialised businesses” (Wang and Ohngren, 2010).
| Hybrid devices “mobile phones and net books, are more portable, smaller, smarter and quicker” (Takahashi and Ha, 2010). DVD players “3D technology is the new hit in recent years” (Takahashi and Ha, 2010)Tablets “with boom in touchscreen technology tablets will become more attractive, easier to use and companies will start battle to dominate this new market” (Takahashi and Ha, 2010).Internet CloudsTouch Screen Technology
| Global Crisis “has many effects but most of countries are currently in a recovery” (Lesonsky, 2010)Rising Unemployment Rate “full-time employees may be either forced or willing to work part-time” (King, 2010). Inflation Rising cost of...
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