International Business Development Project
The analysis tool is used by a business in the event of a need to open or develop a new venture into the market. It explains the strength of the company, weakness of the company, opportunities, and probably the threats. To venture into the new market field we must have a clear knowledge of business gap in Germany, and we must check how the government policy affects the existing business and how it will respond to our venture. The threats that might hinder the company from a smooth operation and perhaps the opportunities that will enable the company to thrive.
The strengths and opportunities
The company can use the current sales team to assist in marketing the fashion brand in Germany. All we need to do is to train some staff to learn the German language. The company has an excellent history with the current customers which will give us an upper hand in the new market since some of our clients were coming from Germany. The companies will be established in the biggest cities in Germany which have the highest population and hence a real market. Additionally, the company has the best team of innovators that will enable the business to come up with good fashion that will attract the public (Berninger, 2014).
Weaknesses and Threats
The company must be able to come from these weakness identified from the parent company. The company has been struggling to meet the client’s deadlines because of too much work, and perhaps the company should have number of the work force to eliminate the problem (Berninger, 2014). The company must also be aware of the competitor having the same fashion brands in Germany and the local’s market competition opening shops around the enterprise to prevent some clients from coming to the market (Berninger,2014).
The Cage Analysis
The objective of this analysis is to know whether the foreign market is ready for your members who are coming in. The analysis enables the company to understand the markets that will be receptive and those that will be too costly to enter. The market differences and business practices are mostly driven by the basic functions caused by laws, regulation and thus understanding this will enable the company to come in with far less risk compared to others who may come without an analysis (Berninger, 2014).
This analysis introduces other factors that the company cannot ignore or take for granted. These includes cultural factors which are very hard to change and perhaps the company must learn to live with them. These include the language that might be too difficult to learn, but the company cannot avoid. For example, the Germans are very stoic who like perfection in whatever they do. They don’t admit jokes and other faults. These will, therefore, enlighten the company who wants to come in to embrace perfection and excellence. The Germans are very time conscious, and this will mean a lot the company coming in especially the one with a deadline issue (Berninger, 2014).
The analysis brings the issue of the government. Perhaps, every government has its rules and regulation policies that govern the operation of every company that wants to operate. These systems include the taxation amounts and other legislation factors. Apart from this, the analysis enables the company to understand the geographic location of the country in a target, for example, Germany is in the center of Europe and hence a real market. The economic forces are also analyzed, which gives information on how similar markets operate differently in different countries like in Germany the related markets are not allowed to work within a particular radius to control unnecessary competition (Berninger, 2014).
The Pestle Analysis
This is an imperative and widely used tool that assist in showing up a big picture of the firm’s external environment particularly the foreign market. It is an acronym of Political, economic, sociocultural, technological, environmental, and legal context that the company operates. This helps the managers to gain a better understanding of the various opportunities and the threats that the company may face. The analysis will aid in creating a better vision of the future business landscape and how the firms should operate to be successful. This tool analyzes the market growth and possible the position, potential, and direction that a company should follow (Berninger, 2014).
The company must be able to understand the macro environment to ensure that their strategies are aligned with the powerful forces of change affecting their business’s landscape. When the company exploits a possible shift in the environment rather than to only to survive or perhaps looks for ways to oppose the change, they are more likely to succeed in the new environment. A greater understanding of PESTEL will assist the company to avoid strategies that may be doomed to fail given the circumstances of the environment (Berninger, 2014)
Politically, Pestel provides an analysis of the taxation rates that the company must look at and perhaps, whether the government is involved in the trading agreement such as the other European nations. The economic factors like the German interest rates should be looked at, the local employment per capita and how they are charging is critical. The level of inflation rates in Germany must also be considered and lastly the current exchange rates that may affect the production and distribution of the goods. And other factors like socio-cultural should be considered (Berninger, 2014).
Berninger, C., & Otterbeck, E. (2014). Identifying Market Entry Possibilities in Africa. Lund University.