3 ). global strategy quick trip could allow franchising B u s i n e s s F i n a n c e
ASSIGNMENT INSTRUCTIONS: Comment on the response of 3 of your
peers. The response should consist of no less than 150 words and should
incorporate at least one outside, i.e., from a library database search,
APA formatted reference at the end of the post.Your responses must contribute significantly to your classmate’s
posting and foster further discussion in order to receive the full
points per response. To make a knowledgeable posting, it would be a good
idea to review the supplemental material before writing your response
(attached). Here are the responses of your peers to the questions asked:
QUESTION 1: After reading the text, search for an organization that does not currently do business globally (outside of their home country). What opportunities would international expansion give this organization? List 2 – 3 strategies the organization might use and analyze the benefits and risks associated with each strategy. Justify, why in your opinion, international expansion is or is not a viable strategy for them.
Barnes and Noble does not have any stores outside the United States, although they do ship products overseas. They are not considered a foreign direct investment which is a “direct investment in production or business in one country by a business from another country” (Dyer, Godfrey, Jensen & Bryce, 2016, p. 171). Although Barnes and Nobles may compete with online retail store, Amazon, Barnes and Noble can offer the “experience” of customers visiting its stores abroad. Below are two strategies that Barnes and Noble may use to help consider its expansion:
1. Efficiency (Global Strategy). “Beyond looking at the price of a particular resource, though, companies also have to take into account factors that might increase the cost to use the resource, including labor productivity, and the transportation and communication costs needed to acquire the resource” (Dyer, et al, 2016, pp. 174-175). The benefit would be that stores could be opened on a much smaller scale while still providing an ample amount of products. A risk would be that people living abroad wouldn’t get the “full” store interactive experience with a coffee shop, children’s play area, quiet study areas, etc.
2. Responding to Customers or Competitor (Multidomestic Strategy). “Last, but not least, firms may expand internationally in response to either customers or competitors” (Dyer, et al, 2016, p. 175). As we already mentioned, Amazon is one of Barnes and Noble’s largest competitor. The organization may respond to competitors in order to gain more consumers. Additionally, more people are living abroad and Barnes and Noble may have an opportunity to open its doors to even more consumers. “It doesn’t matter whether someone relocates outside of their home country at age 5 or 45, the experiences gained and the memories retained have a lifelong impact on individuals and their families” (Sandlin, 2016, para. 1). The benefit would be capturing the market audience while understanding what the organization’s are doing as well. The risk would be that the market is consistently changing at a pace where Barnes and Noble may have a tough time catching up to appropriately respond. If Barnes and Nobles goes forth with their international expansion, I
feel that their best bet would be to only open a limited number of
stores abroad. As we know, Barnes and Nobles stores are very, very large
and opening many stores could be a costly challenge. It may be more
efficient to open smaller versions of the retail store while still
accommodating the latest and greatest books available on the market.
QUESTION 1: After reading the
text, search for an organization that does not currently do business
globally (outside of their home country). What opportunities would
international expansion give this organization? List 2 – 3 strategies
the organization might use and analyze the benefits and risks associated
with each strategy. Justify, why in your opinion, international
expansion is or is not a viable strategy for them.
HENNA’S RESPONSE: Quick Trip is number 33 on Forbes list of top privately owned companies in the United States (Forbes, 2017 para. 33). They are based out of Tulsa, Oklahoma. They have 700+ locations in 11 states (Quick Trip, 2017 para. 1). I would suggest they expand north all the way to Canada. Canada’s history on gas refueling stations is interesting. For a long time Canada’s gas prices and filling stations were primarily controlled by the fuel manufacturing companies. This is diminishing quickly. For example between 2015 and 2016 the fuel prices controlled by the seven fuel refining companies has gone down by five percent and in turn the privately owned fueling stations has gone up by five percent (Kent Group, 2017 para. 3).
Quick Trip could allow franchising into Canada. This is not recommended though. It would be relatively low cost for Quick Trip as a company, the Quick Trip brand is not well known in Canada and thus the franchisee would have little to gain from doing so. It would be simpler for them to go to a large gas station chain that is already well known in Canada.
Quick Trip could also simply start get all necessary licensing and contracts to build new locations in Canada much the way they have expanded in the U.S. This is the most expensive option, but they would have all of the control of the locations. This is also not recommended as a mode of entry into Canada.
Recommended mode of entry for Quick Trip is a joint venture. If Quick Trip was to go into a joint venture with a relatively small but well known gas station chain they would be able to utilize their resources and the cost of fueling contracts would be relatively low. They could also provide the needed capital to the smaller chain for expansion further into the Canadian market. Eventually they could buy out the chain and change the name thus allowing them to become more popular in Canada.This could also allow for ease of further expansion under the Quick Tripname. QUESTION 1:
After reading the text, search for an organization that does not
currently do business globally (outside of their home country). What
opportunities would international expansion give this organization? List
2 – 3 strategies the organization might use and analyze the benefits
and risks associated with each strategy. Justify, why in your opinion,
international expansion is or is not a viable strategy for them.
GREG’S RESPONSE: One of my favorite companies to shop at is Menards. Menards started in Eau Claire Wisconsin but now has 300 stores in 14 states and focuses in the home improvement industry as a low price leader (About Menards, 2017). I believe that Menards could operate in foreign countries where some of their products are sourced. They would benefit from being a “local” customer in these countries with improved relationships and pricing opportunities. While home improvement is dominated in certain countries by a select group of companies, I am not aware of a global leader in the industry and that could be a major opportunity for this company. While I believe that international expansion is possible for this company, I think it is far more likely that they will continue to spread out in the United States before they invest in foreign countries. Their current business model works in the United States and there is no reason to think that it would do better in Spain than it would in the neighboring state of their current expansion pattern.
Because Menards has always been a private owned business, they are not likely interested in a franchise of joint venture type of expansion. Instead the expansion would be based wholly around a wholly owned subsidiary of the company. While the time, investment and risk to the company are all elevated, the company can benefit in that they appear to the host nation that they are fully invested in the community and not interested in simply siphoning funds from the economy to send back to America (Dyer, Godfrey, Jensen & Bryce, 2016, p187). This strategy would allow the company to maintain full control and ensure that the international expansion met the vision that they had for the company globally.
In several emerging markets there are arbitrage opportunities which Menards may be able to take advantage of. Arbitrage involves buying where costs are low and selling where they are higher to make a profit in the process (Dyer, et al, 2016, p183). Many of the products sold in the United States at Menards are actually produced overseas. Setting up retail stores in these countries would allow for relationships to be built upon which better pricing and terms can be generated over time. Instead of allowing importers to add their profit along the supply chain, Menards can cut out the middle man by going directly to the source and getting products into their own logistics systems closer to the point where the products are produced.
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