ABC company scenario and challenges the company may face on expansion
Global expansion in businesses is often the next move after gaining stability in the local market. Business owners must consider the payroll costs of all employees after expansion and the international taxation costs imposed on all international businesses before becoming global. This paper analyses the ABC company scenario and identifies the challenges the company may face on expansion. The essay also evaluates vital decision-makers and their roles during expansions, while finding solutions to ABC’s main problems.
According to the case study, the ABC Company has been in the widget business for ten years. Although the company is not aggressive in its pursuit of dominance in its field, it has survived in the business industry by holding on to a small section of the widget market. The business had fifty employees, all based in one location. Due to its lack of aggressiveness, the company’s demand has remained stagnant. The company also faces high turnover cases and weak communication procedures.
The ABC Company faces many challenges in its quest for global expansion. First, the company holds minimal terrain in the widget market. It has not made expansion efforts to different districts or even as an online-based market. Secondly, the current global market necessitates diversity in production. Therefore, the company would struggle in its expansion as it does not have much to offer. Thirdly, the company’s owner is an older adult who works from home. He has no communication with his staff or junior managers. The little communication he has is over the phone with senior managers. Such a business structure is highly disruptive as it leads to mistrust, employee mistreatment by the managers, fraud, lack of internal cooperation, and a reduction in productivity. Finally, the company’s most disruptive challenge is the high rate of employee turnovers, and it un-stabilizes operations and leaves the company open to competitor destruction.
According to BC Campus (2020), human resource management teams are critical in decision making. These managers play the role of advocating for the staff’s needs even after expansion. Therefore, ABC must find a reliable management team that gradually pushes employee performance to increase the business’s relevance in the global market. The business owner must also make an effort to meet with employees to create a sense of harmony and enhance communication. All staff members and managers are critical in the expansion as all their input would aid in increased productivity and sales. For instance, legal requirements differ in different countries and even states (Bell, 2018). A firm’s lawyer would research to ensure that it does not cross any legislation.
The business needs to strategize on many factors to ensure a swift expansion. Since the company has few productions and little domain, the best method of rapid development is through licensing (Trade Start. CA, 2020). The business could allow a similar industry to distribute its products internationally to increase its market presence. After, ABC could then use its profits to expand its market without assistance.
The company would require a lot of time to transition from a local to a global business because it has no dominance in the market and suffers from internal weaknesses. First, it would require time to entice employees to increase retention, and then expand its productions locally, before moving to a global market. Moreover, the company must consider expanding its products to prevent competition and increase profitability (Bell, 2018). It should also create a reliable communication system between employees and managers and strengthen its fairness and equality policies to prevent mistrust at work. The underlying assumptions used in this paper are that the company makes little profits, thus requires more productivity and that its competitors are willing to sell its products globally through licensing.
Companies choose to globalize their productions for reasons such as increasing profitability, offsetting competition, and ensuring global dominance. However, there are many factors that an organization needs to consider when making such a huge change. ABC Company must first increase its productivity and employee relations before making global expansions to ensure a successful shift.
References
BC Campus. (2020). Overview of managerial decision making. https://opentextbc.ca/organizationalbehavioropenstax/chapter/overview-of-managerial-decision-making/
Bell, T. (2018). Global expansion-What to expect and how to prepare. GAPS Briefing, https://gapstoday.org/gaps-briefings/global-expansion
Trade Start. CA. (2020). Market entry strategies. http://www.tradestart.ca/market-entry-strategies