Introduction
Over the past few decades, there has been a meteoric rise in the number of multinational firms. Companies that are doing well now are the ones that dared to dream big and go global, seeking out new chances and markets. The most successful companies across the board have operations in multiple countries. John and Deborah’s intention to expand into overseas markets to boost sales and expand the company is, therefore, a calculated risk with a high potential for reward. However, the corporation needs to consider several criteria in addition to the worldwide successes of some of its high-end competitors before it can begin the strategy of going into the global market. Resource availability and supplies are expected to be of enormous concern in the chosen nation or nations, and these are two of the primary concerns that need to be discussed. It is also crucial to think about how resources would affect the choice to relocate to a new country. The importance of resources to the company’s worldwide competitiveness cannot be overstated.
Resources Concern in Global Strategy
The ability to amass capital to fund operations is a crucial aspect of any business’s success, regardless of the nature of the industry in which it operates. It is crucial to remember that the term “resources” comprises a wide range of options beyond just “money” for maintaining operations (Faryabi et al., 2019). The ability of the firm’s management to oversee overseas operations, the availability of cutting-edge technology that will allow the company to compete on the global stage, and the capacity to muster sufficient human labor are all crucial considerations. This is especially so given the labor-intensive nature of the furniture industry.
Organizations need a lot of money to make it in the international market. Having enough capital is crucial since it is likely that the company will not experience the same level of success overseas as it did at home. This will allow the company to invest in things like research and development, marketing, and the lease of space for its future manufacturing facilities. Money is also needed to pay local legal representatives in the countries where the company plans to open offices (Faryabi et al., 2019). Lastly, but most importantly, before a business can break even in the worldwide market, it needs a sufficient amount of capital on hand to cover its operating expenses.
In addition to capital, the company management team’s competence and credibility in developing an effective foreign marketing plan should be assessed. When entering the Chinese or Indian markets, for instance, two of the fastest-growing middle-income nations worldwide, a different set of managerial attributes will be required. This forces the company to evaluate whether or not it possesses the right personnel to compete successfully in these markets and, if not, what the best course of action could be (Faryabi et al., 2019). This will likely determine whether the company establishes operations in the target market or seeks partnerships and contracts to cover the gap with respect to management and funding capability.
After determining if it has enough resources and can effectively manage its operations, the company should then determine if it possesses or can obtain the requisite technologies. If a company is in a position to open a branch, it will want to keep overhead, such as employee compensation, to a minimum (Faryabi et al., 2019). Given that John and Deborah operate in the luxury end of the furniture sector, they will need to be nimble and creative to succeed on the global stage. Indeed, it is because of this skill that the company has been successful in the United States market since its establishment.
Resources that may be a concern in China
If they have not already, luxury furniture manufacturers should think about expanding into the Chinese market. Suppose the latest data showing that the Chinese furniture market expands by over 15% in a year is any indication (Xiong et al., 2020). In that case, it is indubitable that the prospects support the sales and revenue growth of John and Deborah’s company. China has the largest number of middle-income people whose luxury product preferences keep rising. In addition to having access to sufficient finances, competent management is a crucial resource for achieving success in the Chinese market.
It is helpful to divide the Chinese market base into three distinct groups: devoted shoppers, those who can afford high-end brands and middle-class consumers. The company’s leadership should not forget that middle-class Americans are the nation’s largest furniture purchasers. However, the organization needs to find passionate customers who tend to be affluent and price-insensitive. The market for Western-style, classical Chinese style, and contemporary furniture is strong among this demographic (Drah, 2022). The organization should also be concerned about the middle segment, whose members tend to favor more personalized furnishings. Therefore, the ability of management to fulfill and satisfy these objectives will be crucial to securing a place at the top of China’s luxury furniture market.
Impact on the Decision to Move to China
The company’s capacity to compete in China is directly tied to the caliber of its management. The corporation should consider the following tactics because it does not currently engage the Chinese market in business. The corporation has two options for entering the Chinese market: it can either acquire a smaller firm or enter into a contractual or partnership business arrangement with a more established local firm. Since the corporation wants to create a long-term strategy for this market, the acquisition is the ideal option. If the corporation does not believe it can take over one of the local businesses due to a lack of finance, it can instead seek out contractual or partnership arrangements. After developing the administrative chops essential to operate in this sector, the parent business can launch a branch office.
Impact on Competitive Strategy
The corporation needs to pick a strategy to help it compete internationally in a market where China is expected to replace the United States GDP as the world’s largest by 2025. The company’s long-term success depends on its ability to break into the Chinese market (Drah, 2022). It is recommended that the company acquires one of the smaller firms already in China to attain a competitive acquired. From this vantage point, John and Deborah’s business will expand thanks to the HR department’s expert management. The concept that the homegrown business may already have established connections to clients is a further potential benefit.
Conclusion
It is crucial for a business to weigh the potential advantages of an international expansion strategy against the risk of losing ground in the marketplace. A company’s ability to increase sales and expand its operations could be negatively impacted without a competitive advantage, making such a move counterproductive. Therefore, it is critical to undertake a study to assess whether a corporation will compete successfully in the chosen market to avoid such a scenario. If John and Deborah decide to venture into the Chinese market together, they should stick to the procedures and recommendations described above.
References
Drah, H. (2022). Eighteen furniture industry statistics for Canada in 2022. Review Moose. Web.
Faryabi, M., Rahimiaghdam, S., Kousheshi, M. R., & PourAghabalaei, A. (2019). Effect of market orientation and international experience on export performance with the mediating role of international marketing strategy. Journal of International Business Administration, 2(1), 23-44. Web.
Xiong, X., Ma, Q., Wu, Z., & Zhang, M. (2020). Current situation and key manufacturing considerations of green furniture in China: A review. Journal of Cleaner Production, 267, 121957. Web.