ELEC CASE STUDY
The strategies applied by ELEC up to the current moment.
ELEC is a company specialized in the manufacturing of medical equipment. Their main electronic equipments are electrocardiographs and spirometers, and they focused their production on Turbine spirometers over Fleisch, as the main goal of the company is to provide the highest quality possible. ELEC has decided to go international and start to export, as they the last 2 years won 90% of all public competition on the domestic market and almost the same regarding the private competition, which has made it difficult to grow even more on this market. So their fundamental market strategy is to grow by expansion to other international markets, instead of for example develop their product. They have very little experience with exporting their goods and have until now only sold directly to other companies or doctors, who already knew their products or the high prestige of their company in Spain. The goal is to reach a turnover of 3.005.000€ over the next 5 years, which is approximately 67% higher than the current turnover of 1.800.000. Because of their lack of experience in the international market, they have decided to focus on only 3 potential markets in South America, Chile, Argentina and Brazil, which will make it easier for them to analyze the best business opportunity and find a distributor there. The countries may be far away, but they are all similar in some way to Spain, mostly regarding the language, as both Chile and Argentina speaks Spanish, which will make the communication easier and Brazil speaks Portuguese, which is similar to the Spanish language. Argentina and Brazil are also a part of Mercosur, which for the company is an attractive platform to go in to. The human resource within the company dedicated to the export is a new export manager that ELEC has decided to create and consolidate to help them achieve their goal and determine which export market to choose and find distributors. The export department will be a part of the commercial department, but will subordinate directly to the general director, as the goal is to give him a lot of freedom and responsibility. The international entry mode is to find a distributor in the foreign country who can help them sell their products. If they choose Argentina, they would be looking for a distributor with good selling capacity and technical ability to install and maintain the equipment sold, as they have previous bad experience with an Argentinean company who didn’t follow up. If they decide to go in to Brazil they will try to collaborate with a Spanish company who already operates in this market or a new local distributor, who doesn’t already work suppliers from the US, Germany and Japan. The strategy in Chile would instead be to participate in exhibitions, where they would have great opportunity to meet importers, whole sellers and distributors. The typical end customer is in all of the three countries the doctors or the hospitals, which doesn’t already have the sanitary equipment or need better and more precise machines.
Which criteria should Manuel consider when making this decision? These are the general criterias Manuel should consider when making his decision about going international and which country to choose.
It a very good idea to start with an export plan and find out what is the main objective of the company of staring to export internationally. The export plan should answer the following questions at least: What does the company want to get out of the export activity? Is export activity consistent with the rest of the activity in the business and if not do we want to change strategic direction? How will the competitors react when we enter the market and are there any? Product demand: More concretely, one the first things Manuel should do when considering which country to go in to, is analyzing what is the product demand for their sanitary equipment in the different...
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