Assignment 2: Expansion into a Foreign Market, Part II Note: Refer to Assignment 1 to complete this assignment. Assume that the company reviewed, voted on, and accepted the study that you prepared for Assignment 1. Everyone involved is satisfied with your analysis of the country’s culture, politics, laws, ethics, and economics. Now, you are being asked to look into the business aspects of a deal, and report on customers, markets, competitors, and finances of one foreign organization with which the company might choose to deal. Note: Avoid expressing personal opinions of the market. Write a six to eight (6-8) page paper in which you: 1.Select the organization that the company would like to deal with, and briefly describe its business profile. Note: Your description should include, at a minimum, but not be limited to the organization’s mission, lines of business, and main products / services. 2.Analyze the fundamental approaches that the company might take in dealing with the proposed organization (e.g., export, FDI). 3.Determine the best option for the company to use in order to minimize foreign exchange risks. Justify the response. 4.Suggest two (2) ways in which the company could leverage politics and laws in order to maximize the probability of a successful deal. Provide a rationale for the response. 5.Determine the key financial, operations, marketing, and human resources commitments that the company must make. Next, recommend one (1) strategy that the company could use in order to fulfill at least one (1) of these commitments. Justify the response. 6.Use at least two (2) quality references. Note: Wikipedia and other Websites and blogs do not quality as academic resources. Your assignment must follow these formatting requirements: •Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions. •Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length. The specific course learning outcomes associated with this assignment are: · Analyze the challenges and advantages of foreign direct investment. · Appraise the strategies companies use to minimize risk in the foreign exchange markets. · Formulate supporting financial management, operations/production, marketing, and human resource management strategies to conduct international operations. · Use technology and information resources to research issues in international business environment. •Write clearly and concisely about international business environment using proper writing mechanics. 1.The company which we will be studying is Enterprise which is engaged in the business of car rentals and also various other rentals and used auto business. The industry has been growing at a healthy rate and when we see the US car rental industry we will see that the revenues has grown from $20.08 in 2012 to around $40 billion in 2014.The United States represent have of the total revenues in this industry with Europe leading for the second position. The company Enterprise have expanded their leasing business to the buying of the new cars and using them along with the selling them to the public as used cars. They entered the daily rental business and also the truck rental businesses. Overall they have several business units which can be differentiated with the mode of doing business. They are the off-Airport market which deals with the travelers and the holiday packages. The On-Airport market deals with the business travelers through exclusive ordering facilities and express check out. The After-market deals with the selling of the used cars which they have bought from the manufacturer. This has reduced the cost of reverser logistics. The country in question for market entry will be HongKong.HongKong have been growing as the major business hubs of the world with the technology and computer software industries (Carroll & Grimes, 1995). The car rental industry is in the nascent stage with some of the companies starting operations. The auto industry is highly developed which will help Enterprise to buy the cars and then resale them. The demand of rental services is also high in this country as there is less cars due to lack of parking spaces and high fuel costs. The reasons for the selection can also be justified by the Enterprise model of providing services to the universities and this gives them the necessary branding. Now Hong Kong has also a university structure which is similar to the US and this will be helpful in executing a similar business strategy. The growth in the Asian markets has been seen due to the robust economy and this can be attributed to the larger sales revenue for Enterprise. 2. Determine the key institutional constraints that must be considered. Next, analyze whether or not the institutional constraints you determined support the market entry into the new country that you selected. The key institutional constraints which must be considered are the political pressures, the easy of doing businesses, the environmental concerns and the business communities. The political pressures for doing business are quite significant as the government have laid down very stringent rules for the market entry. There should be links with the government for the smooth running of the operations in the country and this can be some problem for Enterprise. The problem has been analyzed and this can be solved with the entering of the business alliance with any of the incumbent car services which are there in Hong Kong or by the acquisition of a firm. The easy of doing business is Hong Kong is less as the corruption rates and the red tapes have been high for the new businesses. The government supports business and it has create various forums for the development of a sustainable business future for the country but the problem still exists in this country. The large metropolitan culture which have settled in the country have eased a problem a bit with the advancement of technology and the change in the mindset of the people ,this is bound to change. The local business communities will oppose this market entry as this could disrupt their businesses which are public transport and car hires. This problem can lead to unrest in the localization of business and can be solved by the acquisition or entering into a joint venture with a local firm. 3.The value proposed by the Enterprise model will be that there will always be a car at you service with the tagline “We will pick you up”. This is applicable in the context of Hong Kong as it has no car rental services which have a plethora of domains to service their customers. The value which has been proposed will be applicable as there are many professionals who live in rented apartments and so they do not have the space for parking. This rental will help them own a car at cheap rates. The cars are new withy all the technology and also the anti-pollution measures fitted in which are important when we see in the present business scenarios and environmental concerns (Grant et al., 1991). The rarity is in the loyalty programs which help the customer to select their own cars and this is done by the online reservation system, This has helped the client to ignore the booking and registration which have saved time. The felt of Enterprise consists of new cars and also luxury cars. They are the Jaguars and the Land Rovers for business travelers along with cars which are meant for luxury during the holidays and vacations. There is also the poor car service along with renting trucks. This wide range of value proposition is rare in Honking and also in the US. The up gradation of the discounts and the one-timer service in which the user can leave the car in a different town from that where it has been rented are new in the industry .These services will give the company a first mover advantage (Carroll & Grimes, 1995). The imitability is low as the technology is ever changing and so the various methods of Customer relationship management.Hongkong which is a city supporting advanced technology this is essential and will attract many clients. The highly trained technicians and the use of state of the art navigation systems will also help them to find a unique advantage in Hong Kong. The organization follows a matrix based structure which helps in the coordination of the various departments in understanding the problems and their analysis with effective participation from the leadership. 4.The cultural aspect which has been seen in the context of Hong Kong has been the presence of various diverse groups. The population consists of Asians mainly Indians and Chinese along with people who have settled from all over the world. This cultural diversity is very important to understand for Enterprise to do business in Europe. The car is a symbol of status and not a necessity as the public transport is well developed. Thus the value must be to treat the customer as a king and enter the services market. The language problems can be solved by employment of the local people who understand can comprehend the buying behavior of the customer. The customers needed to be respected and in this country, timely service and behavior of the staff will vet the most important(Kennedy et al., 2003). The political pressures will be mainly from the local business communities and also the transport services which will believe that their businesses are in danger. The problem can be that these associations may have political relations and this might hamper the entry of the Enterprise into the market. The strategy which must be employed will be to enter through a subsidiary which can be any car or auto service which is having ashore in the market. 5.The process of Joint venture needs to be followed to enter into the market of Hongkong.The car rental market in Asia provides about 8% of the revenue to the global revenue. The country chosen will help in the increasing of the profit margin as it will have a forts mover advantage. The joint venture with companies like Hongkow will help to enter the localities of Hongkong.The joint venture will be mutually beneficial to both the parties. Enterprise will have more customers and they can use their successful model of targeting the various customer segments like the businessmen, professional who live in rented apartments, the tourists and the students along with the residents to improve their market share. They can have a huge potential market as Honking is a financial hub and the business leaders often meet and they can spend for a good car service (Grant et al., 1991). The tourists are mainly Americans and also Europeans along with the businessmen who visit the country. They can be targeted which will give them freedom to use the service along with the feeling of comfort. The people in the rented apartments and the professional can be targeted by the carpool services and also the used car after-market business strategies.Hongkow can benefit with the various business strategies adopted and also will increase the likelihood of sales as they know the local culture and so they can help Enterprise to set up kiosks at popular destinations and understand the pricing policies.Hongkow can also improve their fleet by installing the technology and adopting similar software. The next step of Enterprise will be the acquisition of a car rental company to increase their fleet in the country and to apply the business concepts learnt from the joint venture. 6.The three major difficulty which may occur if Enterprise goes for a joint venture with Hongkow will be: Cultural disconnect: The attitude of the Asian firms will be to protect their businesses from the influences of the Americans and this has been seen in many of the domains. As the cultural diversity is quite large between the two firms there will be the problem of convincing Hongkow. The local language and the rituals which are followed will also be a problem which will arise in this transaction. Intellectual property: The software which have been used NY Enterprise gives them the competitive edge over their competitors. The database management and the recording of the customer feedback and then analyzing them with their customer relationship management software have helped them to gain market share and engage customers. This software may be used by Hongkow and this might lead to the infringement of the same(Kennedy et al., 2003). Training: The car rental industry in Honking has not been developed according to the level of business which have taken place. This makes the companies hire people who can just perform their duties. On the other hand the American car rental industry have been highly developed which has led to hiring of highly skilled professionals who ensure that the customer experience is great. The lack of training of the Hongkow employees will directly impact the reputation and brand value of Enterprise and this may also lead to loss in businesses in many of the geographies. The strategy which needs to be adopted to deal with these problems will be the all-round skill development of the employees and making them understand the business and its scope. This should be made clear in the contract that the software usage will be restricted to the employees of the Enterprise with a small window for the Hongkow employees under supervision. This will enable the Hongkow employees to work and understand the system. The joint sessions which should be organized will increase the teamwork and understanding of the employees of both the companies. This will also help to ensure that there is friction between the two regarding the market share capture. References: Kennedy, R. (2003). "Taking the Co-op Out for a Spin: New Car Rental Idea Depends on Courtesy of Strangers." New York Times, Metro Section. Retrieved March 18, 2004 from MdUSA database ABI/Inform on the World Wide Web: http://www.umuc.edu/library/. Grant, R. M. (1991). The resource-based theory of competitive advantage: implications for strategy formulation (pp. 114-135). California Management Review, University of California. Carroll, W. J., & Grimes, R. C. (1995). Evolutionary change in product management: Experiences in the car rental industry. Interfaces, 25(5), 84-104.