GLOBAL EXPANSION OR BUSINESS AS USUAL? Audiotech Electronics, founded in 1959 by
ID: 1137953 • Letter: G
Question
GLOBAL EXPANSION OR BUSINESS AS USUAL? Audiotech Electronics, founded in 1959 by a father and son, currently operates a 35,000-square- foot factory with 75 employees. The company produces control consoles for television and radio stations and recording studios. It is involved in every facet of production-designing the systems installing the circuits in its computer boards, and even manufacturing and painting the metal cases housing the consoles. The company's products are used by all the major broadcast and cable networks. The firm's newest products allow television correspondents to simultaneously hear and communicate with their counterparts in different geographic locations. Audiotech has been very successful meeting its customers' needs efficiently Audiotech sales have historically been strong in the United States, but recently growth is stagnating. Even though Audiotech is a small, family-owned firm, it believes it should evaluate and consider global expansion. 1. What are the key issues that need to be considered in determining global expansion? What are some of the unique problems that a small business might face in global expansion that larger firms would not? 2. Should Audiotech consider a joint venture? Should it hire a sales force of people native to the countries it enters? 3.Explanation / Answer
Ans:
1) Audiotech need to consider the following in determining the global expansion:
a) The demand for its products in different countries.
b) The entry barriers in the industry in different countries.
c) Inquire about the competitiors and their size of operation.
d) The size of the markets and the possible growth in economic development of the countries.
e) Tariff and trade restrictions existing in different countries need to be considered and should be evaluated considering the cost factors.
f) Political and legal environment in the countries also plays a major role in the success of the business.
2) some of the unique problems small businesses face in global expansion are
a) Expansion of business require large amount capital which is not a problem in case of large firms.
b) Small business may find it difficult to adjust to global practices.
c) Expansion increases the cost of operation and level of operation which require better management for success in competitive environment.
3) Audiotech should hire sales force as this allows to meet customer needs efficiently as compared to joint venture.
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