Elecdyne is a Japanese SME established in 1990. The company is based in Tokyo, Japan. The company produces a wide range of electronic products including televisions, CD players, DVD players MP3 players, and hi-fi equipment among other similar products. The major activities of the company are within Japan and as such the company only supplies the Japanese market. The company obtains its inputs from local suppliers within Japan. It does not source its inputs from international suppliers. This implies that the ability of the company to compete effectively in the local Japanese market is limited as the industry giants based in this country pose high competition to the company. The company has failed to grow its sales over the past two years owing to the fact that its operations are only limited within the boundaries of Japan. This makes it increasingly difficult for the company to compete effectively. The company cannot hire research graduate to carry out its R&D activities since the graduates prefer working for highly successful and better paying organizations. This limits its ability to make appropriate adjustments on its products in terms of features and other necessary attributes. In order to compete effectively, the company should consider venturing into overseas markets (Renata, 2012, p. 22). For instance, the company can establish its activities and operations in china, India and the United States. Once it establishes in these countries, it will have a potential for improving its business and realizing higher profits in the future. Here is a detailed analysis of Elecdyne.
STEEP analysis is a tool that is commonly used in carrying out an evaluation of different external factors, which have a significant impact on an organization. STEEP is an acronym that stands for Social, Technological, Economic, Environmental, and Political factors affecting an organization. In as far as STEEP relates to Elecdyne, it is evident that before expanding into the three named countries the management has to consider and where necessary consult on the factors represented in the acronym. It is necessary to carry out a thorough analysis of STEEP because the management should have a good and wide understanding of detailed aspects regarding each of the represented factors (Richard, 2000). For instance, the social factors prevalent in China, India and the USA differ significantly, as these countries have people with different cultures that influence their response to the products that the company will introduce to them.
These cultures are significantly different from the homeland culture of the company, which is Japan. The technological aspects of each of these countries are different and as such, understanding the technological affairs prevalent within each of the targeted countries will enable the management to plan effectively for production, marketing and other related affairs of dealing with the project (Chin-Chun, 2006). Analyzing the economic status of each of the proposed countries is significant in that it will enable the company management to plan its activities in the new market zones effectively. This is because changes in economic progress are anticipated based on the global economic condition. Analyzing the external environment that affects the businesses in these three foreign countries significantly enables the company to select the suitable locations whereby it can position strategically and therefore not suffer adverse effects that may prevail in some of the locations where the operating environment might be challenging.
The political affairs of a country determine the policies developed regarding businesses in general and foreign investment into a country. Scanning the political environment in the three countries will enable the company management to understand the rules and regulations that they should abide by and therefore be able to operate smoothly while complying with the regulations. Elecdyne management should identify the differences prevalent in the different countries with regard to these factors and therefore develop an internationalization plan that is specific to each country (Partrick, 2011). This will enable the country to meet the internationalization expectation for each country.
Porter’s Diamond model for competitive advantage of nations gives a clear insight on why some industries are more competitive than others are in particular locations. Porter’s approach considers a number of considerably small industries in which case the competitiveness of one country has some relationship to performance depicted by other companies as well as some other significant factors that are tied together in the value added chain (Partrick, 2011, p. 54). This may also occur in customer-client relation or even in either local or regional contexts. Phenomena that are analyzed draw from factors incorporated into the diamond model. These factors include factor conditions, demand conditions, related and supporting industries, firm strategy, structure and rivalry, government as well as chance.
Concerning Elecdyne, it is clear that in order for it to establish and thrive in the new market in the countries indicated, it has to consider the factors named here above. Considering factor conditions, it is necessary for the company management to consider its human resources, physical resources knowledge resources among others. Specialized resources as indicated are usually specific to an industry and consequently necessary for its competitiveness (Jane, 2007). These can be created in order to compensate for existing factor disadvantages. Analyzing the demand conditions of the countries in which the company is to internationalize will enable the company to carry out faster innovation in which case it will be bound to create more advanced products compared to those of competing firms in the foreign countries.
A thorough search is necessary to determine the availability of related and supporting industries in the targeted countries since such industries can provide the company with inputs that are duly essential for innovation and internationalization. Such industries are important for the company since they can provide cost-effective inputs, participating in upgrading process and hence stimulating innovation in other companies in the chain (Eren, 2011). Considering firm strategy, structure, and rivalry, it is clear that the manner of creation of companies, setting of goals and management is significant for success.
As such, once the company studies the environment in the foreign countries, it will be able to design a firm strategy, and structure that is consistent to the goals and the proposed management plan (Chin-Chun, 2006). The governments of the three countries have differing policies that determine the operations of foreign companies. As such, it is necessary to understand the policies of each of the country in order to ensure compliance to them. This will enable the company to operate smoothly. The possibility of occurrence of chance for the company once it establishes in the foreign companies is necessary for consideration. This will enable the company to make decisions whereby chance has the possibility of favoring it.
China is an upcoming superpower that is increasingly viable economically. This is a clear indication that a company willing to internationalize into China has the potential to experience great business success. However, this will depend on the business strategies and approaches undertaken by the company in order to achieve its set goals and objectives. The country has plenty of related and support industries that would offer Elecdyne cost-effective inputs (Ole, 2011). The country also has different industries that encourage the upgrading process and hence stimulate companies within a particular chain to innovate. This presents an opportunity for Elecdyne to innovate so that it can provide high quality products that satisfy the needs of the customers appropriately. The country is technologically advanced and the company can use available technology to carry out its operational activities in the country.
The USA has been an economically viable country for a long time over the past. It also has large market base and as such, establishing in this country would enable Elecdyne to have plenty of customers for its business. However, this would depend on whether the company would produce and market its products effectively and competently. The country has related and support industries that can offer the company inputs for its products. It also has plenty of human resources that the company can hire in order to ensure that it has competent employees (Warren, 2001). The government has soft policies regarding foreign investment, which are friendly to foreign investors as long as they comply with the policies of the country regulating foreign business investments. The country is technologically advanced and therefore the company can utilize the most current technologies to carry out its production and marketing activities in this country.
Considering India, this rapidly growing economy presents the company with potential for success (Rukhmini, 2005). The country has a vast population that offers the company plenty of clients. However, in order for the company to succeed, it should consider the cultural aspects of the Indian population. As such, it should tailor the products so that they reflect the cultural affairs of the folks in this country. The country is improving economically and technologically and this implies that there is potential for foreign investors who are competent in production and management to establish and succeed in this country.
China is a country that has experienced tremendous economic success over the recent past. This has been because of good performance of the industries in different sectors. As a result, the country has become industrialized and emerged as a powerful economy in the globe. The strengths of the country lie in the availability of various category resources. For instance, it has plenty of physical resources that industries in this country can utilize in production. The country also has plenty of human resources (Chin-Chun, 2006). Most of the individuals in this country have the technical expertise and experience in production of different varieties of products. The country is highly populated and therefore, there is plenty of labor in the country. However, it has a weakness in that the common language is Chinese which may not favor the operations of foreign investors.
The USA has been an economic superpower over the past. However, owing to many economic and otherwise challenges, its economy has slightly declined. Nevertheless, it is on the rise and as such, this indicates that it has the potential to regain its economic competence. The country is industrialized and has plenty of industries that can enable the economy to regain its stability. It has strengths in availability of resources. For instance, is has plenty of human and physical resources. It is also strategically located for business activities across the globe. The country is technologically advanced and this presents Elecdyne with the opportunity to utilize the available technologies in its business activities (Partrick, 2011). However, it has weakness in foreign policy since owing to the possible current security threats; it has tightened its foreign policies. The country has plenty of experts able to provide labor for establishing investments. The country is currently financially unstable. However based on the plans in place, it will stabilize soon. This is promising for investors willing to establish in the country.
India is a growing economy with a vast population. It is encouraging adoption of new and current technologies. Its strengths lie in the plenty of natural resources as well as a vast population that offers plenty of market for products in the country. It also has good foreign policies, which encourage foreign investment with the aim to expanding and growing the economy. The country has limited financial ability. However, at the rate at which it is growing, it is evident that it will have a storing financial base (Rukhmini, 2005). With its current population, the country has plenty of labor to utilize in industries. The weakness of the country lies in the ability of majority population to offer professional services and others to purchase products that may have high price tags due to poverty in some geographical areas of the country.
The Chinese government has introduced leniency with regard to foreign investment. Due to globalization, which is rapidly taking place, the political leaders of the country have implemented policies, which offer opportunities to foreign investors in the country. This opens the ground for companies like Elecdyne to establish in this country. The country is currently experiencing rapid economic growth and the economy is stable. This may positively influence foreign investors in the country (Richard, 2000). The social factors prevalent in the country entail the cultural affairs. The country has a unique culture based on the language spoken and other factors. The culture may be an obstacle to foreign investors who may find it difficult to conform. The country is experiencing tremendous technological development necessary for boosting operations of home and foreign investors. This has been enabled by R&D activity
The political climate of the USA encourages foreign investment. However, investors should agree to comply with the internals rules and regulations that govern operations of home and foreign investors accordingly. The economic growth of the country has slightly declined over the past, however, it is slowly picking up, and the economy will soon be stable if no adversities will be experienced globally. This is a motivation to foreign investors willing to invest in the country. The social factors prevalent in the country entail the population growth rate and career attitudes among others (Warren, 2001). Majority population have positive attitude towards careers and foreign investment in the country. The country has advanced technologically and as such, its level of technology is suitable to attract investors into the country.
The political realm in India highly upholds foreign investment. This is because the country focuses on growth and expansion of the economy. This is possible by encouraging domestic and foreign investment. The country is experiencing rapid economic growth owing to plenty of labor and economic resources. This is an incentive for foreign investors. The social affairs of the country revolve around the cultural aspects of the folks. There is high population growth rate in the country, which implies availability of market for products (Jane, 2007). The country is also implementing current technologies borrowed from super economies. This implies that it is gradually advancing technologically.
|Political climate suitable for investment||Political leaders have a fairly suitable climate for foreign investment due to recent reforms||Political leaders encourage and offer incentives to domestic and foreign investors|
|High economic growth||Economic growth declined slightly over the recent past||Economic growth in progress and rapid|
|Social factors like language may be an obstacle||Positive attitudes towards investment and an international language suitable for foreign investors||Culture aspects gradually changing to accommodate global expectations|
|High technological advancements suitable for investment||Advanced technology is an incentive for foreign investors||Growing technology is suitable for business activities|
Based on the information obtained about the three countries, it is advisable for the company to seek investment opportunities in these countries. In china, the company can establish joint ventures with the domestic companies that produce electronic products. This is suitable, as it will enable the company to establish good business relationships with other related and supporting businesses in the country. In the USA, the company can choose to merge with other existing companies in the country so that it can be established in the country without having to face stiff competition from the already existing companies that have already secured their market. In India, the company can make acquisitions as well as establish greenfield sites from which to set up as independent business. This is because the country is still developing and such a decision would positively yield for the company in future. These decisions are necessary in setting a ground on which the company can review its operations in future and make changes as appropriate in order to realize its goals (Richard, 2000). These decisions help reduce competitions which may have detrimental effects on the company in the foreign countries
To sum up, it is ideal for the company to internationalize in these countries. This is because there are prospects. However, the success of the company depends on the decisions that are made with regard to the action to take. For a start, it is necessary for the company to consider mergers and joint ventures where necessary. This is because these forms of business will enable the company to establish in the respective countries and make appropriate adjustments in future if need be, this also enables the company to buy time to understand the details of operation in the foreign countries and hence devise a competent plan in this regard. Still establishing independently in the appropriate country would be a significant move towards success.
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