Group 5 Final Paper Free Range v4

Topics: European Union, Dairy product, United Kingdom Pages: 12 (2768 words) Published: November 23, 2014
Free Range: A Case for International Operations
Group 5
Katherine Stone, Michael Williams, Shawn Williams, Horace L. Wynn, Scott Terry AMBA 610 UMUC

Part A: Potential Advantages and Shortfalls of Various Globalization Strategies Globalization strategies have been an issue for any organization that intends to increase its international presence. Free Range Foods has decided to grow operations in France, the United Kingdom, and other regions throughout the globe. The recommended strategies Free Range Foods should consider utilizing in order to strengthen its position in the international market are 1) Merger and Acquisition/ Takeover and 2) Strategic Alliances. Both strategies are effective in obtaining an entry into the desired markets including France, the United Kingdom, Canada, and Eastern Europe. We will outline the advantages and disadvantages of each strategy and provide our recommendation on how we believe Free Range Foods should proceed. We will first look at the advantages of forming a strategic alliance(s). A strategic alliance is the decision of multiple organizations or companies to share resources in order to undertake a specific, mutually agreed upon goal (Jones, 2014). A few advantages of strategic alliances are as follows (Mansfield, 2010): Easier access into target markets

Sharing financial risks
Winning political obstacles
Achieve synergies in marketing each other's products/services Cooperation in sharing facilities
Far less expensive than purchasing a company
A few disadvantages include:
Future profits at risk
Distractions between companies
Unclear communication plans
Poor chemistry between organizations
Alternatively, Free Range Foods has the option to consider a merger or takeover of a rival organization. Mergers and takeovers, while sometimes considered to be the same thing, are actually two separate strategies with their own inherent advantages, but are similar in they share similar shortfalls and disadvantages. A merger implies the absorption or coming together of two equally sized or performing businesses to create one single entity. A takeover is most often associated with the acquisition of a smaller, or unequal, company by a larger organization.

The advantages of a merger include:
Reduced costs through greater purchasing power, lower budgets for marketing, etc. Improved market penetration where the formerly separate entity had control or majority Diversification of goods and services rendered to consumers

Merging of manpower creates a greater core of skilled workers and production Similarly the advantages of a takeover are:
Speed of a takeover allows a corporate entity to quickly acquire capital and manpower without requiring the finding of more employees or resources To meet stakeholder expectations, the corporation’s shareholders may expect quick results; rather than waiting years for company growth through internal means, the acquisition of a smaller company means new markets and potential for growth Reduced entry barriers allows for penetration by the larger company into formerly small market areas without the need for advertising costs and marketing strategies Several disadvantages of mergers and takeovers include:

If either business involved has poor reputation, this might damage the buying or selling entity’s reputation with stakeholders Manpower regulations or criteria might not carry over to the new company, resulting in loss of personnel through layoffs Poor business reputation among lenders/suppliers (similar to above) Inheritance of poor financial credit, practices, or management In the case of hostile takeovers, companies may require stock to be paid back from stakeholders that sold their shares Fiscal or Federal regulations impacting one entity impact the other The establishment of anti-trust regulations might prevent the acquisition or merger from following through

Part B: Factors to Review Before Going International...

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