Flexit International case
1- Flexit was not wrong in considering international expansion. The use of market development strategy was appropriate in their situation due to the following reasons: 1-Existence of the European market as new unsaturated market with competition less than US market 2-The medical equipment industry is global with potential for rapid growth. 3-They had a reliable distributing company (Physique ltd) which is an established health care product distributor in the European market.
The main problem with this strategy is that the production capacity of Flexit was for long time oriented for the American market and they should reassess the capacity of the factories regarding quality and quantity before expansion into the European market. 2- Information needed before decision making include:
1- Capacity of the production of the Flexit factories regarding the volume and quality. 2- Market research in the European market regarding forecasted market share and the volume of the expected demand. 3-The operational decisions incorrectly made by Flexit:
A) Marketing decisions:
International marketing was given to Mr Sellem who had no international experience. B) Production decisions:
Increasing the volume of production without quality control. C) Logistics decisions:
Relying completely on shipments from USA to the European market without developing a new factory in Europe which would reduce distribution time and provide support in case of excessive demand. 4- Strategic decisions:
1-Because of the perceived weakness in lack of quality and resulting declining sales I will go to a defensive strategy such as retrenchment strategy to reduce losses through reduction of expenditure on the European market. 2-Then I will try to strengthen the company through integration strategy through forward integration with owning Physique ltd to control the distribution. 3- After integration and owning Physique ltd I...
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