Dick's Sporting Goods market entry strategy for Mexico

Bringing Dick's Sporting Goods Into Mexico

Dick's Sporting Goods is a company that is specialized in the manufacture and sale of sports gear within America and other 45 states around the world. It was started in the year 1948 by one ex-soldier, Richard Stack. After the World War 2, Richard retired and started this company. In a short while, the company grew to countries beyond the United States of America. The company also increased the capacity of its production and expanded the market. In all instances, the expansion was done to areas that were in need of the sports regalia. With developments in new sports in the world, the company has been in the forefront diversifying their production. This way, the company has kept being accustomed to the situation in the market. The expansion has also spanned through the areas of technology to bring new products that are better than the previous ones (Malinowski & Fuente, 2008).

Expansion to the International Market

The company has been making strides into the international market over the years. Over time, the company has been opening branches all over the world. The reason for this is to increase sales and make more profit. The local market has been saturated and over-utilized. Any expansion is through expansion into the international frontiers to increase the earnings. Before an entry into the international market, a study of the country of interest is done in order to know how feasible the market is. This is done on a frequent basis. It involves a study of both the culture and the economy of the country of interest. The cultural assessment is done with the aim of coming up with an understanding of the spending habits of these people as well as how the people behave and react to new products. For purposes of this study, Mexico was chosen as a country of interest. Mexico was chosen as it is geographically near the home of Dick's Sporting Goods (Higgs, 2010). This is done in a bid to assess how potentially easy it is to expand to the market within the American continent before moving out to the rest of the world (Pearce, 2012). The assessment will also seek to investigate and make out some conclusions about the economic status of Mexico. This study also seeks to assess the suitability of the country in comparison with the rest of the countries in the world.

Background of the country

Mexico is located in North America, although most of its engagements and cultural practices are aligned to the south. It is also evident that the country's culture is aligned with the central and South American nations. It is also clear that Mexicans have a unique cultural practice as compared to the others. The people of Mexico are mainly Catholics. More than 90% of the Mexican citizens profess the Catholic faith. This came because the Spaniards colonized the country. This also explains why the language of communication in this country is Spanish. Mexicans are known for their rich culture and pride in their practices. This explains why the country has been rated as one of the most richly founded cultures in the world. It is also noted that the country is more inclined to its internal practices than they easily adopt other people's cultures (McManus, 2013). There is also another angle to the culture of the people of Mexico. The people in this country have a high preference for their own locally produced goods over foreign imported goods. They prefer to consume their products that to purchase those which have been manufactured from outside the country (Malinowski & Fuente, 2008).

On matters of sports, the country borrows most of the games from America. For instance, the game of basketball and baseball that are mostly played in Mexico are borrowed from America. Mexico is also known internationally for its endowment in football players (American football teams in Mexico, 2010). Most of the football players in Mexico take part on the world football stage. The country has participated in world stage football. The country has also managed to outshine the rest of the American nations at this. Mexico is the leading country in the entire American continent in terms of football endowment. It is also seen that the world has been much awed with Mexican football to the point that some European football clubs have been buying footballers from this country.

The Economy of the Country

Mexico is among the top twenty largest and expanding economies around the globe. It is also ranked as the 11th country in terms of the Purchasing Power Parity according to the International Monetary Fund. The level of the economic growth in the country is on a steady rise. The level of growth in the country has also been fueled by the exploration of oil deposits in the country. Mexico is also famous for its local tourism. The level of tourism in the country is sufficient to rake in a sizable amount of foreign exchange (Stokes, 2012). This has enabled the country to go through the situations of economic downturns that have come over the world at times. The nature of the economy in this country is on a growing path. It is evident that the country has been encountering a series of growth due to its prudent leadership and the dedication of the ruling class to overcome the several issues that the country has been facing (McManus, 2013).

The country's GDP stands at 1.2 trillion dollars. This is a huge economic endowment. It is seen that the country has been to on growing its GDP annually in the recent past because the country has been expanding its exploration of the oil sector. The oil sector has gained value because of the global rise in oil prices. It is also seen that the increasing industrialization in the world has been putting pressure on the oil prices. The prices in these cases have been rising at a high rate (Malinowski & Fuente, 2008).

Political and Government Influences on Trade/Business

The political climate does not support many international companies. Local politicians are very individualistic and at the same time keen on controlling the local business and trade. This way, the country is put in such a mood that is against foreign investors coming in to make investments. The concerns that the citizens have is that they might also lose a chance for the jobs that local companies would have given them. For instance, it is noted that most of the employees who have in the past worked for multinationals have ended up losing their jobs on unclear grounds (Higgs, 2010). The security of the jobs with multinationals is highly cast in doubt by these locals. They support the idea of having a localized way of doing business because they can control the demand and the employment terms.

The politicians' preference for the localized investment in the sector is purely for financial gains. With this kind of business, they will be able to control the proceeds of the company as well as even invest in the same industry (Wilcox, 2010). Since they pride themselves in the public trust that they have been accorded as leaders, they can sway the people's minds regarding what to buy. This kind of environment is not safe and conducive for an international company to make an attempt. This, despite the shortcomings related to it, has made the local communities prefer local companies to multinationals (Cateora, 2010).

Involvement in International Organizations

The internationalization agenda at the company is such that the management has been attempting to form mergers and partnerships with other major companies in the same industry about the same. This kind of strategy has yielded positive results in the markets that are not much controlled by pro-local forces. This kind of market in Mexico is unfavorable for any attempts to make mergers with multinationals. Deliberate legal attempts have been made to bar any company from moving in with an international company though mergers. This makes the environment hostile for the coming in of Dick's Company. However, the laws do not expressly put a prohibition of such a merger, but the hurdles placed on it are so stringent that they simply have to quit such kind of merger.

Importing/Exporting Strategies

Marketing at Dick's Sporting Company is done on both local and international platforms. The most vibrant marketing currently done is on the international stages. The reason for this is that the market has been growing outside the home country, which is already saturated. All industry players must appreciate this fact (Cateora, 2010). The company does both the importation and export. All that the company imports are the raw materials that are used for the production. For instance, the cotton is imported for the purposes of making the clothes and tanned skin for making shoes.

In contrast, exportation is on the finished products. These are exported to countries within America and even out of the same. This has all to do with the creation of a market that can sufficiently fulfill the obligations of the company. The local market alone cannot consume all the products produced by the company. In order to reach out to the entire international market, the company is supposed to deal with the good supply chain and management network. The business of exporting the products once produced can be costly at times. This explains why the company has been doing feasibility studies to assess how each of the earmarked export routes has been. Before the company exports to a new field, they have to conduct an analysis of the costs involved in it. Each of the routes has its challenges and has to be tackled through a well-studied approach to it (Browne & Steane, 2011).

Recommendation

As it can be seen, it is not viable for the company to move to the Mexican market. The reason for this is that the market is not likely to give sufficient returns to offset the costs incurred. The nature of the communication employed by the company, despite it being appropriate, it has not gotten to market the company's products to Mexico. Mexico's market environment has not been such hospitable to foreign companies. In this case, any attempt by the sports company to move into this territory is ill informed and will likely result in some losses and unnecessary inconveniences (Wilcox, 2010).

It is important that the company identify the viable markets to establish itself. It is a fact that not every market can be trusted. Mexico is one example of a market that the feasibility of establishment is bleak. In this case, if the company has to venture into the Mexican market, the company has to seek ties that are more diplomatic with the local companies in Mexico (Browne & Steane, 2011). This will expose the company to some good view of what the locals want and how to play along with them. The market also has to get rid of the political machinations that have controlled it for long.

One recommendation that can be made to Mexican administration is to reexamine their laws on international companies coming into them. The government has to understand that the presence of foreign companies can be good in adding to the country's capital stock. It is also important to ensure that the companies that are within the country consider taking into mergers in order to raise their trade volume. This will have a direct impact on improving the country's well-being in terms of increasing the employment capacities and raising the volume of trade. This also has a multiplier effect of increasing the country's GDP through exports (Pearce, 2012).