Market Entry strategy International Business Management Advisor

Running Head: INTERNATIONAL BUSINESS MANAGEMENT ADVISOR

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INTERNATIONAL BUSINESS MANAGEMENT ADVISOR

International Business Management Advisor

Market Entry strategy

Company Introduction

Sani-Matic Inc. is situated in Sun Prairie, WI, United States. It is a machinery manufacturing industry. The company has a total of 125 employees across its locations. The company generates about $ 24.52 million in sales. The company designs and produces automatic sanitary process cleaning equipment, from clean-out-of-place parts washers to clean-in-place systems and sanitary parts that provide a complete clean. The company’s additional expert services include a tactical solutions program that ensures the optimization of money-saving efficiencies and increased productivity, field service, and start-up programs.

Industries in which the Company Operates

The company capitalizes on food, beverage, biotech, pharmaceutical, nutraceutical, and personal care. The company stays committed to producing sanitary cleaning results for various industries, including beverage and food, and bio-pharm, which encompasses personal care, biotech, pharmaceuticals, and nutraceutical industries.

Food and Beverage Industry

The company supplies businesses ranging from small enterprises to multinational corporations. Some of the most recognized and respected brands have trusted Sani-Matic, whose priority is to deliver product safety every time. For this reason, such brands turn to the company for cleaning confidence and cleaning solutions. The team has experience in developing equipment, systems, and procedures that meet safety standards. Some of their products in this industry include cabinet washers, tunnel washers, tanks, COP washer components, CIP systems, and boosted pressure systems.

Bio-Pharm Industry

This comprises the biotech and pharmaceutical industries. Bio-pharm refers to applying living organisms and their extracts, components, or by-products to relieve, prevent, or treat diseases. Some of the most recognized brands trust the company for critical cleaning challenges and turn to Sani-Matic for hygienic, valid cleaning solutions and confidence. Every equipment for bio-pharma cleaning for the biotech, nutraceutical, pharmaceutical, and personal care industries meets ASME BPE and cGMP standards and individual safety and manufacturing standards. Their products in this industry include clean-in-place (CIP) systems, immersion component washers, and GMP cabinet washers.

Company’s Position Given Porter’s 1990 Diamond Analysis

Factor conditions

Demand conditions

Related and supporting industries

Firm strategy, structure, and rivalry

Natural resources

Natural resources for product production are readily available within the country, and some are imported.

Human resource

The company has about 125 skilled workers across all its locations.

National stability

The company has a stable position, having established a strong foundation. It also has a loyal customer base, dealing with some of the most respected and loyal brands.

National culture

The company’s corporate culture maintains its business philosophy, beliefs, values, and behavior among employees and has enabled human resources to support various strategic objectives

Domestic market

The company has capitalized on food, beverage, biotech, nutraceutical, personal care, and pharmaceuticals.

What clients value The company’s clients have prioritized product safety and have put their trust in Sani-Matic Inc. to deliver product safety, reliability, and convenience.

Strength of demand: the demand is high with the most respected and widely recognized clients.

Specialized business The business is constantly designing innovative products designed to meet customer needs.

Suppliers

Strong domestic supplies; also aiming at going international.

Strategies used

The company uses both competitive and corporate strategies to be among the best in the manufacturing industry. Strategies used include differentiation and cost leadership.

Company structure

Hierarchical organization structure, with divisional characteristics

Competition

The company stays ahead of its competitors by the strategies used.

Managerial system democratic leadership style

Based on these factors, the company has continuously been forced to innovate and upgrade to maintain its position within the manufacturing industry. This has made the company retain its competitive ability locally. Judging the company from this analysis, it is likely to succeed outside the United States (Vlados, 2019).

Company’s Competitive Strategy Used in the US

The company’s strategy and intensive growth strategies are related directly to its strategies in marketing and pricing. As one of the valuable companies in the United States, the company shows that its strategy is the main determinant of its competitive advantage over other manufacturing companies in the United States. The company’s strategy supports its ability to maintain a strong position in the manufacturing industry in the States. With a high innovation rate and an emphasis on excellent product design, and relatively low pricing, the company can do well and stay among the top manufacturing industries. The company’s generic strategy aligns with its competitive growth strategies when it comes to the maximization of the company’s competitive advantage. The intensive growth strategy is particularly essential for product development and supporting the long-term success and growth of the company (McGee & Sammut?Bonnici, 2015).

The company focuses on a differentiation strategy by continuously designing and manufacturing unique products at affordable prices. For instance, the company prioritizes product safety, hygienic, valid cleaning solutions, and cleaning confidence. This has always given the company a large customer base and competitive advantage. As a result, the company has established partnerships with some of the most respected and recognized brands. This strategy implies that the company must continuously design and manufacture innovative products through continuous research and development (McGee & Sammut?Bonnici, 2015). This is necessary to maintain its competitive advantage within the manufacturing industry. Also, to deal with local competition, the company has ensured that it forms strategic alliances with local distributors and retailers.

Company’s Corporate-Level Strategy Used in the US

One of the corporate-level strategies used by the company is product delivery at competitively low prices while remaining profitable at the same time. Another strategy is forming strategic alliances to benefit from economies of scale, share risks and costs, and tap knowledge from competitors (Meyer & Breitenbach, 2004). Another corporate strategy adopted by the corporation is the internalization of production, allowing the company to take advantage of low labor costs, access high potential markets, and access raw materials. As a result of this strategy, Sani-Matic beats the competition by maintaining standardized products since design and manufacturing are closely monitored and centralized. This makes it easy to identify their products.

The Company’s Domestic Customers

The company’s domestic customers range from the food industry, beverage industry, pharmaceutical, personal care, nutraceutical, and biotech industries. Their customer base comprises some of the most recognized and respected customers who have placed safety at the top of their priority list. They have hence put their trust in Sani-Matic to deliver products that meet their desired needs.

The Company’s Readiness to Engage in International Business

To maintain business growth, the company has always been committed to growing its market within the United States and is also committed to growing its market to reach the global consumer reach. In its strategy, the company focuses on the bio-pharm and food and beverages industries. Hence, the company competes by selling products and offering services that meet the specific needs of these industries, placing emphasis on safety, reliability, and confidence. Thus, another objective of the company based on its strategy is to penetrate the international markets for a broader reach. The company understands that this is only possible through intensive growth strategies. Some of the company’s intensive growth strategies have been put in place to ensure product development and market penetration (Kelinda, 2016).

Product development

The company uses this strategy as the main intensive growth strategy. This strategy requires that the company continuously designs safe, attractive, reliable, and profitable products to grow its business performance and market share (Belcourt, 2016). The company uses innovation as a competitive advantage and a critical success factor. This strategy allows for the company’s growth because new products enable the business to generate more revenues. For instance, when the company began in 1943, they developed a clean-out-of-place (COP) components washer for the dairy industry. From then, the company began an instant innovation of automating sanitary cleaning processes. The company has stayed committed to sanitary cleaning results for the pharmaceutical, food and beverage, and biotech industries.

Market Penetration

This strategy involves acquiring a larger market share by selling more current products designed by the company. For instance, the company has employed this strategy in selling more COP component washers and CIP systems, and GMP systems for the bio-pharm industry. More sales are achieved by making using authorized sellers to boost their competitive advantage in the existing market. This strategy has helped Sani-Matic to penetrate markets where it initially didn’t have a significant position. Additionally, the company promotes its products and services through various media outlets and websites. This helps them with publicity and encourages more consumers to purchase their products and seek their services.

Target Country Market

The company’s products determine its target country’s market (Górecka & Sza?ucka, 2013). The company is currently committed to expanding its operations by penetrating the African market, specifically the South African market. This was done by carefully researching a list of potential country markets, after which the decision to settle for Germany was made. After carefully studying the political, economic, and cultural factors that affect Sani-Matic operations, the decision was made.

Primary Screening

This stage is a critical success factor for the entire selection process by trying to minimize two potential errors. First, it reduces the risk associated with spending a lot of time investigating developing countries. This is done by focusing on low-cost and available quantitative data. A quick and simple screening can cancel many poor prospect countries from the following in-depth analysis (Górecka & Sza?ucka, 2013. Secondly, this technique helps the researchers not to ignore counties that offer good prospects. Using this screening technique, South Africa was identified among other countries, and this first stage of screening was applied in the research process. It was then ruled out as a potential market, among other potential prospects, to expand Sani-Matic, after which secondary screening was conducted. This was done by critically evaluating and comparing the country characteristics based on the already set criteria by which every potential country’s target market was evaluated (Nazarova. 2019). The criteria indicated the market size, level of economic development, political and socio-cultural factors. The market size was estimated by projecting the actual sales and the consumption and imports of the company products in these potential countries. South Africa was found to be among the countries that already had a customer base for some of the products manufactured by the company (Górecka & Sza?ucka, 2013.

Secondary Screening

This is where the target country’s competitive power or attractiveness and other special competencies were considered. On attractiveness, aspects like market size, market growth, buying power of consumers, average industry margin, competitive conditions, and other government regulations were considered. Economic and political stability was further looked at in-depth (Galova, 2014). Aspects like market share, marketing ability, contribution margin, and market support were analyzed on competitive strength. After this evaluation, a decision is then made based on the attractiveness and competitiveness of the target country’s market.

Cross Border Opportunities Present

Local Market Expertise

Not being aware of the foreign market can be a big challenge for any business. Trends vary from different regions and are essential to learning the different patterns, the preferred mode of payments, among other factors. Having a local market expert can be very useful in achieving this goal faster since they already have the information regarding everything or the majority of things one would need to know before starting operations in a foreign country. The company can thereby take advantage of this opportunity to save time.

Local Promotions and Marketing

This narrows down to understanding the demands of the target market before the actual marketing of products. Sellers tend to face difficulty when attracting customers since the trends are determined by culture and other specialties. Having the local expertise would also help interact with the target local market before presenting the products.

Most Viable Opportunities

Some of the most viable opportunities in the target country include the food and beverage industries, the automotive industry, and retail. The company would be able to maximize these areas. Based on a wide availability of natural resources like minerals, the company will also increase production rates and reduce the cost of exporting some of the minerals required for operations (Tokas &Deb, 2020).

Cultural distance, Administrative and political distance, Geographic distance, and Economic distance (CAGE) analysis for the target country market

Cultural distance

Administrative distance

Geographic distance

Economic distance

Attributes creating distance

· Different languages

· Different ethnicities

· Different religions

· Differences in national work systems

· Diverse value, norms, and dispositions

· Lack of colonial ties

· Lack of shared regional trading bloc

· Absence of shared monetary association

· Political hostility

· Government policies

· Physical remoteness

· Lack of a common border

· Size of the country

· Sea access

· Differences in climates

Differences in consumer income

Differences in the availability of natural resources

Financial resources

Human resources

Intermediate inputs

Industries or products affected by distance

· High linguistic content products

· Products affect the cultural or natural identity of consumers

· Product features vary in standards and size

Government involvement is higher in the following industries:

· Electricity

· Aerospace

· Telecommunication

· Infrastructure

· Transportation

· Oil and mining

· Communication and connectivity are important

· Local supervision and operational requirements are high

Differences in labor and other factor costs

Differences in distribution and business systems

Companies should be responsible

Target country market relative to labor, infrastructure, natural resources, regulations, and sustainability

Labor (cost, work ethic, productivity, availability)

The country has been on a projector of growth. Since 2000, the labor force has become more educated and has availed skilled labor that the company can take advantage of. Unskilled labor also exists, and with high unemployment rates in the country, labor is readily available. The cost of labor is also relatively low than that of the labor market in the United States, which will help minimize operations costs. With the skilled labor available, productivity is likely to be efficient.

Infrastructure

South Africa is the best-developed country in Africa currently. The country has a relatively stable core network of infrastructure in terms of water availability, good transport and communication systems, and energy supply. These aspects are essential in maintaining and supporting economic growth and the country’s social development goals.

Natural resources

The country is rich in various minerals like diamonds, gold, platinum, iron ore, manganese, chromium, copper, platinum, uranium, titanium, and beryllium. Some of these metals are very useful for the company’s products because some are the essential components of the products. The ready availability of such resources is, therefore, an added advantage.

Regulations

In South Africa, different rates apply to different goods and commodities. The South Africa Revenue Service provides the particulars regarding imports and exports.

Sustainability

Sustainable development is classified as development that fulfills the needs of the present generation without conceding the cability of future generations to fulfill their needs. The country’s national development plan has set a transition to a stable environment and just society. Economically, the country can sustain growth and development based on the availability of natural resources within the country (Meyer & Breitenbach, 2004). Additionally, some policies have been put in place to ensure a safe and healthy environment.

Target Country Customer

The business shall mainly target the food and beverage industries in South Africa. This is a very common industry in every part of the world, and so it avails many opportunities. With the company’s convenient, reliable, and safe products, the business is anticipated to do well and gain a competitive advantage over the existing manufactures within the country. The uniqueness of the products coupled with the relatively low pricing is expected to give the brand a competitive advantage.

Entry Strategy to Enter the Target Market

The company’s market entry strategy is to establish partnerships with some of the most recognized companies in South Africa. The company will venture into a sophisticated strategic alliance with such companies for manufacturing. This strategy was deemed fit mainly because of the cultural difference between the US and the South African market. Local business partners bring local market understanding, contacts, and customers (Ricart et al., 2004).

The Company’s International Competitive Strategies

The international competitive strategy to be employed by the company is a global strategy. For instance, this strategy would allow the company to sell its products at a standardized price. Another competitive strategy likely to be used by the company is cost leadership for competitive advantage. Using this strategy, the company is likely to stay on top of other manufacturers in the local and international scopes by ensuring that their product pricing is relatively lower, making them affordable (Keninda, 2016). This is likely to increase their customer base since the low prices are essential in attracting customers. The main goal of this strategy is to cut operational costs. The company so far tries to do this by internalizing production. A strategic objective associated with this strategy is to build a competitive advantage by continuously improving their products through constant innovation. Moreover, the company has the objective of investing in research and development to optimize its product performance (Ricart et al., 2004).

International Corporate-Level Strategies

The international corporate strategy likely to be employed by the company is global standardization. By definition, this is the ability of a company or business to use standard marketing globally or internationally, that is, the use of the same marketing strategy in different countries. This strategy is essential when a product has the same appeal internationally. The main reasons why the company considers using this strategy are related to the cost and brand. In terms of cost, global standardization will give the company an advantage in that the company will not have to cater to special marketing for every market. Instead, it will maximize using the same strategy as that already used in the United States. This would help the company cut costs by not developing several marketing strategies (Keninda, 2016).