Market Penetration Costs and Consumers

Discuss about the Market Penetration Costs and Consumers.

Technological changes in the world have made companies engage in foreign trade. The aim of engaging in businesses in foreign countries is to enlarge the customer base and increase sales which will, in turn, increase the profit margin. The goal of each and every firm is to make more profits which ensure continuity of its business operations in the market. Tata Company is one of the most successful companies with headquarters India. The company serves mostly the domestic market and intends to engage primarily in international markets. The aim of a company to go into the international market is to avoid or reduce competition in the market. The businesses can use the blue ocean strategy which aids in eliminating competition by getting ‘blue oceans' which are markets without competitors. The markets can be identified in foreign countries.

Engagement of international trade has more restrictions regarding the other countries laws and regulations. The entry into the new market is a risky activity and needs intensive research which is very costly and sometimes may not depict the real picture in the market. Tata Company was aware of the domestic market hence able to control it to its advantages. The needs of the home markets it is aware and knows the methods to use in production to maximize profits. However, the foreign market brings with it uncertainties for the company, and there is no assurance of success. The barriers to trade in the foreign country may be many and harsh than those of the countries of origin.

Getting into a new market needs great insight to enable an organization is successful. The strategy of the Tata Companies to think of joint ventures is very appropriate. The plan reduces competition to the firm from the other business, and you bring finances to support growth and development. When in joint venture going into international markets is less risky as the risks are shared and also there is vast information to evaluate the markets. The two companies carry out different researches which the findings are combined thus the most lucrative international market to engage in is identified.  Through the joint venture, the Tata group of companies will have many innovations and the profits will increase due to the global marketing.

Ratan Tata is a great leader who has propelled the company to tremendous success by being a great manager in supervision and decision making. He is a risk taker and very firm in the decisions he makes. All business people should be optimistic and not fear when making decisions as only risk takers are successful managers. The business environment is full of uncertainties and needs skills for leaders to anticipate the future of the industry and make the appropriate decisions. His qualities were risky, but due to research and knowledge he had, they led to great success. Leaders must take responsibility for the decisions they make and be fully accountable.

The successor of Ratan Tata must step up and do better than him but continue with what he had done while pursuing new business ways. The company is very extensive, and needs are leaders with the knowledge and determine to ensure its success in the markets especially know when it intends to go to foreign markets.

A company engaging global expansions exposes it to many risks as the new markets have new guidelines not conversant to the enterprise. The greatest fear of any firm is the failure which has high chances when expanding globally. Some of the risks that the company may face include the following. Cultural differences in the new markets and to some extent may hinder the success of the business when the people's culture does not allow consumption of use of the items. These may be for example selling pork meet in Muslim communities may lead to direct failure of the business.

Competition in the foreign market may be high making the company not survive due to the many disadvantages compared to the domestic enterprises. The government may impose heavy taxes on the foreign firms to encourage the growth of the home industries. These may lead to small profits to the foreign companies which may result to withdraw from the markets. Political instability may cause the business to fail because of the wars in the country, their properties may be destroyed, and the market for their products not is available. The laws and regulations of the foreign country may prevent foreign companies engaging in trade in it as some are oppressive and unrealistic. The sources of raw materials may be unavailable in the foreign land, and this may hinder operations of the new firm. The employees are the drivers of the organization, and their availability and competence determine the general success of the business. When in the foreign country there are no employees regarding skills and affordability to pay them in the execution of the company's activities importation may be expensive for the firm. These may force the company close down due to losses incurred.

Global expansion for any business provides an opportunity for high returns the risks are many. A large percentage of leaders forget the risks involved and focus on the benefits only. Leaders are to be optimistic, but they should be cautious in the decisions they make. Carrying out this kind of expansion needs research to know how the foreign markets look like for better decision making. The firm should be able to understand the merits and demerits of the new market fully, and no information should be ignored. The success of a business depends not on the big things it does but the small activities it undertakes.  All stakeholders must be involved in better decision making, and the leaders must depict great wisdom when making a decision of global expansion of the business. They are the leaders and therefore accountable for any failure or success of the organization. Methods of doing business must be well outlined when engaging in a foreign market to act as a guideline for the group.

References

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