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Foreign Market Entry and Diversification - Research Paper Example

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Foreign Market Entry and Diversification Introduction Diversification tends to involve substantial change in the definition of business with reference to customer function, group or other technologies of businesses. Ansoff’s matrix talks about diversification strategy and is one of the popular classifications given by Ansoff’s…
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Foreign Market Entry and Diversification
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Argument for diversification of your business Diversification is a much hyped topic and forms a part of strategic decisions and firm’s needs to decide whether they should diversify or not to diversify. It has been the most debated topic by business and it has been said that firms which has the resources and capability to diversify should g for diversification as most of the businesses planning to go for diversification often fails. Diversification involves the highest level of risk but still firm opt for diversification strategy solely for one reason is to create synergy.

The publishing company may diversify for better opportunities, to leverage the competencies as well as capabilities by way of expanding into business where the firm’s resources can be used as competitive assets. Also to some extend diversifying will help the company to minimize the risk but as pointed earlier the risk involved is high. There is no guarantee that the business will succeed (Rao, et al, 2009, 228). Strategy for diversification indicating the products and industries for the diversification and how synergies may be gained from the diversified activity The publishing company which deals with books and other publishing items should continue with its business and go for related diversification. . Thus the publishing firm may search for new business whose product, market, distribution is similar to that of its own and where acquisition would result in “synergy.

” Thus the company in order to create synergy should enter into related diversification and share resources and capabilities with its existing business unit. Identification and discussion on the foreign market that the company should enter and the strategy it should use to enter the market With the growth of online and digital media, the publishing business has been undergoing significant changes. Thus considering the current situation the publishing business should diversify its business into emerging and developing countries and at the same time follows the emerging trends in the publishing industry which are like eBooks, blogs, mobile publishing along with self publishing (ICMR, 2007).

While diversifying the business the publishing company can opt for strategic alliance. Strategic alliances are formed through partnership between the firms and combining the resources, capabilities and core competencies and pursue a mutual interest to develop, manufacture and also manufacture goods (KAZMI, 2008. 187). The alliance is a collaboration which aims for synergy where both the partners hopes to benefit from the other alliance and will be greater as compared to individual efforts. Other benefits which the publishing company will receive by adopting the strategic alliances is gain capabilities, much easier way to access the target market, share the financial risk and most importantly achieve synergy and competitive advantage which are the important elements that lead a business to success.

Challenges that company may face in the foreign market, and how it might respond

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