Abstract
Able Corporation, producer of power tools and provider of machining services decides to cross the boundaries of the United States and establish itself globally within the next six months. For this purpose, proficient and strategic management planning is a prerequisite. This report deals with various steps that need to be followed for a powerful penetration into the global marketplace.
Introduction
Able Corporation, a US company located in Tennessee, is a manufacturer of machinery catering to various industries. It not only provides machining services such as milling, turning, grinding, but also manufactures power tools, lawnmowers, lawn furniture, microwaves, and other different ranges. Able Corporation has been in business for 40 years supplying machinery services to reputable national organizations which are set on a very large scale.
All products are manufactured locally and sold through large retailers like Sears, Best Buy, and Wal-Mart. Its main target is to strengthen customer relations by a show of sincere commitment to customer needs. Able has been expanding nationally since 1997 when it took over the assets of M.D. Machine Company. In 2001, Able diversified the original facilities causing the capacity and versatility to bloom. However, now it is time for it to expand internationally.
Body
In the fast-paced world of today where geographical boundaries are no longer a hindrance, almost every small business is planning with a universal perspective. Able Corporation is a very successful national business that is guaranteed to flourish even in foreign countries. However, for that to happen, a skillful and adept strategic management plan should be made. Strategic management is defined to be an art of devising, executing, and assessing cross-functional judgments that will enable an organization to attain its goals and aims.
It is said to be an ongoing process because even after the formulation and implementation of a plan, it needs to be examined regularly to check success and failure (David, 1989). Able’s strategic planning involves five major steps – mission and objectives, environmental scanning, strategy formulation, strategy implementation, and evaluation and control.
The first step towards the business plan is to form Able’s mission statement and organize its objectives. A mission statement consists of the business vision – where the management and founder want to see the business in the future years; the predominant key values and corporate principles that the business adheres to; and lastly, the purpose of the firm along with its visionary goals. The slogan of Able Corporation is its identity – “Quality, delivered on time, at a competitive price”.
Since Able focuses on a strong customer relationship; it makes sure that the customers get products of the best available quality which are supplied to them at the desired time at the lowest possible prices for increased affordability and sales. With a global labor market at hand, Able should invest in areas where there is the cheapest labor available. Developed countries are capital intensive, thus, their labor cost is high; with great unemployment in developing third world countries, labor is available at very low prices as the supply is way above the demand due to limited job opportunities. This will reduce the overall cost of production causing the prices to fall and sales revenue to rise.
Secondly, a thorough environmental scan of the country you are entering is crucial – the political, economical, social, and technological situation should be the key for all our decisions. Countries with great political uncertainty usually hinder the industry performance; however, greatly developed countries usually have political unrest going on. A country where there is economic decline should not be entered as it causes losses in investment. Also, every culture is different and various social norms, values, morals, and ethics should be considered before making decisions – things considered correct in one culture might be wrong in other cultures (Ohmae, 1982).
Most importantly, the legal status, the rules, and regulations of that certain country must be adhered to while formulating a company over there or else a heavy penalty might have to be paid. Additionally, an internal SWOT analysis (strengths, weaknesses, opportunities, and threats) of the firm should also be carried out.
Thirdly, formulating the strategy is the most important part – the company should identify the opportunities available in the countries analyzed and should match those with its strengths. Whichever country provides the largest pool of opportunities should be opted for. A thorough analysis of competitors should be done before entering the market to understand the changes that Able has to acquire the majority of market shares.
The major part of our policy should be based on Able’s competitive advantage over competitors – it believes in innovation and finding new methods along with researching and being updated with technological advancement. Three types of strategies exist – focus (quality and customer care), cost leadership (least cost and efficient), and differentiation (research and development); Able is a mix of all three.
Fourthly, implementation of the strategy involves the organization of the firm’s resources and the motivation of the employees. Strategies are implemented through programs, budgets, policies, and procedures; these methods should be culturally sensitive based on the country of operation. Implementation of these policies asks for great financial funds and support – Able should know how to acquire this capital; part of it will be funded by the profits in the US, rest of it will need to be loaned. A thorough examination of loaning/financial agencies needs to be made for each country (Markides, 1999). The basic principle for implementation is the effective communication of all the strategies and the rationale behind them – these strategies need to be comprehended by each employee.
Lastly, monitoring and controlling the strategies is vital to discover the success or failure. If a certain strategy is not reaping fruitful results, it needs to be adjusted. A proper evaluation of the results needs to be done by defining parameters and areas along with their targets that will be measured for checking accomplishment of goals, carrying out these measurements, and then making amendments to the strategies in case the pre-set standards and goals have not been met (Dudik, 2000).
Conclusion
Expanding such a large national business is not an easy task; in-depth research of various markets and countries needs to be carried out. Information regarding Able Corporation will be acquired through the internet, mainly the official Able website. Only after a deep study of different markets worldwide along with the country’s culture, politics and economics can Able Corporation decide to invest in a foreign country because there is a lot of risks involved. However, if the strategic management plan is followed, Able Corporation can very well succeed in becoming global.
References
- F. David, 1989, Strategic Management.
- 1999-2007, The Strategic Planning Process, Quick MBA. Web.
- K. Ohmae, 1982, The Mind of the Strategist, McGraw Hill.
- Constantinos Markides, 1999, “A dynamic view of strategy” Sloan Management Review.
- E. Dudik, 2000, Strategic Renaissance.
- Able Tool Corporation Website. Web.