Management in the Global Business Environment
Question 1. What do you see as being the main strategic options for Mega Bikes to expand their operations into Europe?
Ans 1. The min strategic options that are available for Mega Bikes when it comes to expanding their operation into Europe are as followings:
Mega Bikes can focus on partnering up with Global PEO, that will assist their business in expanding themselves over Europe. They will be responsible for handling all the various task that would be beneficial for the organisation in their expansion such as hiring employees for their business that would be situated in Europe, as an employee are necessary for the working of the organisation, additionally, they will also be responsible for handling payrolls of the employee, the taxes the company would be dealing with in Europe as well as the employee benefits (Schwertner, 2017).
The company can also partner up with independent brokers, wholesalers and international distributors situated in Europe (Teece & Linden, 2017). This will not only be an easier way for the brand to expand its line in Europe but will even act as easy access to be able to enter the foreign markets of Europe.
They could also make use of piggyback marketing. In this marketing strategy, the company comes into a partnership with only one manufacturer or company that is responsible for the distributing products and services of other business in an international market (Susilo, 2018).
Mega bikes can also focus on taking advantage of E-commerce and showcases their bikes through an online platform being able to reach a much higher rate of customers and as well as increase their demand through it.
It could even think of starting as a joint venture with another bike company who are yet not seeling any sort of mountain bikes. Through this mega bike would be able to establish their presence with the help of the local foreign partner in Europe. This will be beneficial for the business in many aspects as they will receive a lot of support and guidance as well as knowledge and expertise from their business partner.
Question 2. Justify the option you think is the best for Mega Bikes?
I think expanding their business through a joint venture would be the best option for Mega bikes. The following reasons would be able to justify why I feel that a joint venture is the best option for the company:
As the company is a Canadian based business, it won't be familiar with the laws and regulations and the ways business works in Europe. By partnering up with a local foreign partner through a joint venture the company would be able to have more knowledge regarding the working of the business in Europe, as well as about the government workings, about the internal market and distribution would be working for the business (Wong, et al., 2018).
This will also allow the company to be able to quickly expand to the changing environment the business is been entering as well as mega bikes would be able to grab and seize more opportunities which will only act as a complementary strength for the company.
The joint venture will also allow mega bikes to be able to reduce their capital as well as manpower and still keep expanding in the markets of Europe and keep growing.
This will also provide mega bikes with more resource, such as specialised staff and technology for their expansion in Europe (Fardella & Prodi, 2017). By using all the equipment and capital that is being required for the business it will be much easier for the business to gain profits in the market. Thus, initially it will also, allow the business to be able to expand their business in front of a large customer market.
This will also decrease the costs related to advertising and marketing, as well as the costs that are being related to the risk associated with running the business. Also, by being partnered up with the right people it will reduce the chances of violating the rules and regulations that have been set up in the European countries the business would be expanding.
Question 3. What are the potential benefits and risks for the company in adopting this approach?
Benefits of Joint venture for Mega Bikes
New Insights and Expertise
By coming into a joint venture, the Mega Bikes gain new insights from their business partners as well as gain the knowledge that is being required to be able to expand their business in Europe by coming into the partnership, mega bikes would be able to understand the markets of Europe and create strategies accordingly (Nippa & Reuer, 2019).
Sharing of Risks and Costs
In case Mega bike is not able to expand their business properly in Europe and face any sort of losses it won't have to bear the losses and cost alone as it would be shared between both the parties who came in the joint venture.
Build Relationships and Networks
By coming into a joint venture, this will allow the company to come into relationship and network with the people with whom they have partnered, this will expand the relationship and network of mega bikes, acting as an advantage for the business to grow and gain new opportunities (Baxter & Srisaeng, 2018). This will allow them to promote their business in front of prospective investors interested in their mountain bikes.
Advertising and marketing cost is being shared
This will allow mega bikes to save money as well as split the cost that is related to the advertising and marketing of the business. By being in a Joint venture, initially, the advertising and marketing costs would be shared.
Risks of Joint venture for Mega bikes
All strategies have their risk and disadvantage associated with it When it comes to the joint venture, Mega bikes might face some risk associated with being in a Joint venture which are as followings:
Vague Objectives
If the objectives regarding the joint venture are not very precise and clear it might create difficulties and miscommunication in the functioning and smooth running of the joint venture.
Restriction in flexibility
In the joint venture, mega bikes can not only focus on its own business but has to pay attention to both the business, this sometimes leads the business to suffer in the process as well as restricting the flexibility in the joint venture (Carr, Hawkins & Westberg, 2017).
Nothing such as equal Involvement
Both the companies who would be in the joint venture would be able to have equal sharing in the profits and costs, but it is not necessarily for the business partners to be able to have the same share in the responsibilities as well as involvement. This something acts as a negative factor as both the partners are getting the same profits and if the responsibilities are not equal this disturbs them.
Clash of Cultures
As both the business would be having various cultures as well as management styles, this might create a class for mega bikes and their business partner, resulting in different beliefs, preferences, tastes as well as leaving a lot of issues in the organisation (Barnard,2018).
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