F90012 Environmental Consultancy

Introduction

Companies consider several ways of facilitating business growth. One of the potential ways of growing is carrying out the market expansion (Wu & Park, 2019). The following report is based on Dawsongroup Temperature Control Solutions (DGTCS), a subsidiary of Dawson Group Plc, headquartered at United Kingdom. Now, Dawsongroup is a leader in the market of providing temperature controlled solutions within the bounds of several industries such as Food & Drinks, Environmental, Logistics, Pharmaceutical, and Research & Development. The main objective of this project is to help the organisation in planning for the execution of its decision to expand its business operations outside the bounds of Europe. For this, the United States of America has been selected as a potential market. Now, another objective of this project is to provide the company with strategic solutions regarding the best market entry strategy, the best location to setup the business. The research methodology used within this report is secondary research to collect the information from already published data. Also, it will highlight the list of potential competitors for the organisation in the United States of America. Besides this, strategic analysis is presented for the company with the help of strategic management tools such as PESTLE, SWOT, Porter’s Five Forces, and competitor analysis. Also, potential weaknesses and strengths of entering the American market are considered. Lastly, recommendations are provided on the basis of market research done to identify the most potential strategy for entering the American market.

Determine the best Mode of Entry for Dawsongroup

With the passage of time, trade barriers have reduced. This has been possible because of trade friendly policies. In addition to this, the trend of globalisation has also characterised companies to expand geographically and enter new markets with the motive of attaining growth as well as development (Sharpton, Lawrence & Hall, 2020). However, expanding into a new market is a critical decision that involves several other decisions along with like the determination of the best market entry strategy, rules and regulations linked to that strategy, favourableness of that market in allowing the company to enter, and so on (Rottig & de Oliveira, 2019). Now, Dawsongroup has been serving as a market leader within the bounds of the United Kingdom in the domain of providing temperature controlled solutions to different business sectors. The entity is considering gaining entry into the market of the United States of America. In this relation, it has been determined that the management of this organisation is looking on the assessment of two potential market entry strategies: exporting from China into the United States and acquiring a company in the United States. For the determination of the best strategy for entering the American market between these two, a critical analysis of these market entry modes is presented beneath.

Exporting:

Exporting is defined as the process of directing selling and marketing nationally produced goods in another potential or emerging market (Pattnaik, Singh & Gaur, 2020). It is one of the traditional ways of carrying out market expansion and consequently, gaining access to the new market overseas. This method does not require the production of products to take place within the bounds of the target country. It clearly implies negligible or no investment required for foreign manufacturing facilities (Kotabe & Helsen, 2020). In this relation, it has been determined that the maximum cost associated with the use of this market entry mode is in the form of marketing expenses. Exporting has relatively lower risks, significant cost, and limited control (Lupton & et. al., 2020). Now, in relation to control, it can be said that exports have almost nil control of the pattern used for marketing as well as distribution. Further, this mode of market entry is characterised by higher transportation costs and tariffs. Besides this, it is also assessed that exporting requires the payment to distributors for providing a set of services. Apart from this, it has been determined that exporting as a market entry mode does not give an organisation a firsthand experience of gaining a strong positioning in the foreign markets. Also, exporting does not allow the export to carry out the customisation of services or products as per preferences and tastes of local people. Even when there are so many cons, this is considered as one of the most potential and easiest ways of carrying out market expansion on a global level (Liulov, Chyhryn & Pimonenko, 2018).

Companies generally carry out exporting to those countries that are nearby the manufacturing facilities as it allows the minimisation of cost incurred upon transportation. This further provides organisations with a chance to leverage the opportunity of capitalising on markets’ similarity owing to proximity in terms of their distance (Li, Zhang & Shi, 2020). With the passage of time, it has become the era driven by the power of the internet. This has elevated the pace at which exporting is taking place in the modern world. The internet has enabled companies, irrespective of their size and scale, to gain critical information about foreign markets, to get access to a potential market, to examine the rivalry prevailing there, and to create a list of prospective clients. Along with this, it has been determined that the process of making an application for export as well as import license has got easier because of the emergence of the internet that is largely being used by governments across the globe for pacing the process. Lately, the low cost associated with this market entry mode has enabled corporations to leverage exporting over any other potential mode. However, one of the critical challenges faced by corporations when making use of exporting for entering international markets is currency exchange rates. In this relation, it is easier for large companies to hire specialists that can manage these rates. Contrary to this, in the case of small firms, their inability or lack of financial resources to hire experts often lead them to fall into the trap of this challenge. One aspect that underpinned the minimisation of number of currencies to be used by companies was the development of the European Union and the subsequent move of adopting a single currency named the Euro (Njoku & Kalu, 2015). However, the United Kingdom lately voted to get out of the EU. Exporting can be used as a market entry mode by organisations for avoiding expenses linked to the establishment of business operations and manufacturing facilities in a new market. The considerations hereby are pricing, packaging, and labelling of products in accordance with the rules and regulations of market intended to enter into. In context of marketing as well as advertising initiatives, entity can create word of mouth publicity through the arrangement of a trade show, or hiring local sales force, or advertising locally (Keegan, 2017). Another potential demerit linked to exporting is the imposition of tariffs on the incoming goods by some overseas markets. These tariffs place impact on profits earned by an organisation. Now, many companies are seen executing their marketing as well as distribution through entering into a contractual agreement. Such organisations are known to have lesser control. They even have to incur a sum of money in the form of fee to be paid to their distribution partners in return for the services rendered by them (Qureshi, Aziz & Mian, 2017).

Acquisition:

It is a market entry strategy that focuses on one company gaining control of another company through the purchase of its stock, exchange of the stock for its own, or in the case of a private firm, payment of a purchase price to the owner (Samiee & Chirapanda, 2019). In the present world characterised by dynamism and hyper competition, cross border acquisitions have become quite normal given that companies want to inflate their level of business operations in a rapid course of time. With the efflux of years, cross border acquisitions have increased to reach 60% of total acquisitions taking place across the global periphery. In this relation, it has been assessed that acquisition is considered an appealing strategy for entering new markets because it allows an organisation to quickly gain access to potential territories (Keegan & Green, 2015). However, it is ascertained that was an expensive strategy for the underdeveloped world to pursue some years back. With the passage of time, the strength of the distinct currencies has altered. The greater interest rates within the bounds of developing countries have led to the strengthening of their currencies as against the Euro or Dollar. In an instance whereby the acquiring company is prevailing within the confines of a nation that has a strong currency, it is probable that the acquisition would be relatively cheaper to carry out. Very often, researchers, industry experts and scholars claim that acquisitions fail because people or businesses pay a large amount of premium (Andersson, Evers & Gliga, 2018). In an instance whereby the currency of the country is strong, the organisation can easily get access to a bargain.

Where companies are making the decision regarding the selection of acquisition strategy for gaining market entry, they need to examine laws as well as legislation prevailing within the confines of the target country (Cateora, c Gilly & Graham, 2015). For instance: China has several restrictions or limitations upon foreign ownership. Besides this, even the United States of America has placed some restrictions on acquisitions. An example can be considered to be the requirement of being an American citizen for owing a TV station within the bounds of the United States. In the same way, a foreign company is not permitted to have an ownership of over 25% within a United States Airline (Gomes, Sousa & Vendrell-Herrero, 2019). Besides this, the research conducted on acquisition as a market entry mode has led to the inference that it is a good strategy in an instance whereby scale is required by companies, as seen in some industries such as wireless telecommunications. Besides this, it has been recognised that acquisition also serves to be a remarkable strategy in the case whereby a business sector is undergoing consolidation (Kachouie, Mavondo & Sands, 2018). Nevertheless, acquisitions are assumed to be risky endeavours. Many studies have claimed that more than 50% of the total acquisitions taking place across the globe fail to enhance the market share of the acquired company by a sum of money more than the amount of investment.

Based on the above discussion and Appendix 1, it is recommended that Dawsongroup Temperature Control Solutions (DGTCS) should use acquisition as a market entry strategy. This will allow the company to have control over its business operations unlike exporting (Ahi & et. al., 2017). Further, this market entry mode can prove to be successful if companies use expert or specialised knowledge of the market and companies that operate as key market players within the industry. By opting for acquisition, Dawsongroup Temperature Control Solutions (DGTCS) will be able to enter the American market and gain access to a large total addressable audience. Thus, it will prove to be fruitful for the organisation and help it to reach to potential clients to provide them with temperature controlled solutions (Oh, Kim & Shin, 2019).

Key Competitors for temperature controlled solutions & Pharmaceutical companies

Temperature controlled solution market is characterised by excessive competition (Luo & Bu, 2018). It mainly owes to the presence of pharmaceutical companies dealing in provision of cold-chain logistics. The names of organisations that especially pose threat to the positioning of Dawsongroup Temperature Control Solutions include Henry Schein, Cardinal Health, AmerisourceBergen, McKesson, and so on (shown in Appendix 2).

Key Competitors for temperature controlled solutions & Food and Beverage companies

Temperature controlled solution market is a potential market that provides cold and heat storage solutions to food and beverage companies. Now, the names of rivals that especially pose threat to the positioning of Dawsongroup Temperature Control Solutions consist of RLS Logistics, Coldco Logistics, Ryder, Becker Logistics, Cold Locker, Tower Cold Chain Solutions, and many more (shown in Appendix 3).

Potential Location for Dawsongroup to establish its business in the United States

The United States of America has been selected by Dawsongroup Temperature Control Solutions because of its strong economic profile and ease of business operations (Boso, Debrah & Amankwah-Amoah, 2018). Now, it is important for the management of the respective company to determine the potential solution whereby it can establish its outlet (Mathews & et. al., 2016). The two major industries that Dawsongroup Temperature Control Solutions is targeting include Food and Beverage sector and Pharmaceutical sector. Now, Boston is acknowledged as the pharmaceutical hub in the United States having more than 100 pharmaceutical companies within the bounds of Cambridge as well as the Kendall Square area alone (Proclinical, 2021). Further, Chicago is referred to as the United States’ capital of food and beverage manufacturing (Fooddive, 2021). Both the locations have the potential of serving as strategic location for Dawsongroup Temperature Control Solutions to carry out its expansion within the bounds of the United States of America. It is also recognised that Chicago ranks #10 on the list of locations with maximum pharmaceutical companies. Considering this, it is assessed that Chicago is a potential location where Dawsongroup Temperature Control Solutions can establish its outlet from where it can supply its products to client companies in both the industries.

Potential strength, weaknesses, opportunities and challenges faced by the company in entering into a new market

The current era is exposed to excessive market rivalry owing to the ease with which new companies gain access into the market (Shankar, 2020). Now, Dawsongroup Temperature Control Solutions has acted as a market leader within the bounds of the United Kingdom for over 30 years now. Looking on its growth and success in the United Kingdom and many other countries across the territorial boundaries of Europe, the management of this entity is facilitating expansion within the American market. For this, potential strength, weaknesses, opportunities and threats are taken into account by the firm through the application of SWOT Analysis onto Dawsongroup Temperature Control Solutions with reference to entry into the United States of America.

Conclusion

Based on the above discussion, it has been summarised that every business operates in the marker for the purpose of attaining growth and success in the long term. In this relation, it has further been assessed that one of the most potential as well as lucrative ways of attaining business growth is by virtue of gaining access into a new market. Now, there are several market entry modes that can be leveraged to gain access to the market of a potential country. Exporting as well as acquisition are two potential ways with the help of which a company can rapidly expand on an international level. The assessment of both of these market entry strategies led to the inference that acquisition is a better strategy for an organisation as it provides the firm with control over its business operations. Also, it enables the entity to gain reach to a larger market area. Besides this, it has been acknowledged that Chicago is a potential market situated within the bounds of the United States of America that has the highest number of food and beverage manufacturing organisations across the nation. Also, Chicago stands at the 10th position in having the highest number of pharmaceutical companies. Exporting is not preferable for adoption as a market entry mode as it contains several rules and regulations that are applicable onto companies that use this strategy for entering a new market.

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