In order to do a strategic management plan, management must understand what it is that the surrounding environment needs in order for a company to succeed in another country. This is done by environmental scanning. Environmental scanning is as it sounds, scanning the environment for trends, events, and relationships with an organizations external environment (Choo, 2001). By doing environmental scanning, managers can see the trends that are going on in a particular place. It helps the managers to determine what changes need to be made to a business in order to keep the business successful. Trends and events can be tracked by the local newspapers and magazines in the target area. This allows the managers to see what the area is looking for and how the business needs to adjust to those needs.
Political stability and the economy are important conditions the managers need to look into. Understanding where the local economy is can help determine whether that particular country would be a good place to continue the growth of a company. Political stability is important because if there are wars going on in that particular country, you do not want your business and your employees in the middle of that. Culture and demographic culture are important because management needs to understand who is working in the local work force such as women or men and which minorities are trending in that particular region.
A company’s competitors can sometimes be what makes or breaks a company. Understanding the local competitors is necessary. We need to know why that particular competitor is thriving in that region. We also need to find out what we can give the local communities that our competitors are not giving the community. This can mean success or failing to our competitors.
Germany’s economy is 1.8 points better than last year (Germany, 2013). Even with Europe’s debt crisis, Germany has done better than expected. They hold firm public finance and they keep their spending under control (Germany, 2013). There has been a slow down in the economy, but due to their efficiency and open market policies, they have started to thrive again. Their unemployment rate is 5.5% (Germany, 2013).
Japans economy is .2 points higher than last year (Japan, 2013). They have more government spending than German. Their unemployment rate is lower than Germany at 4.2% (Japan, 2013). Japans financial sector is well developed, but it experiences government interference (Japan, 2013). They experience constraining mobility because of their traditional labor practices. Japan also has a very large debt burden and this is limited by political motivation that is in urgent need of fiscal reform (Japan, 2013). Japan falls behind other economies pursuing free trade agreements.
PPQ Parts is in the car business, we need to determine which country would be best to expand to, either Germany or Japan. Japan currently has Suzuki that is taking the SUV sales lead in Japan (Chuardi, 2012). Mazda is currently holding the 5th spot in Japan in SUV sales. Mazda has been talking about getting more partners to get them to the top spot (Chuardi, 2012), this maybe something for PPQ Parts to look into to get their increase from 5% to 9% in SUV Sales. BMW’s have always been popular cars throughout the world, so this may make the increase from 5% to 9% a little more difficult for PPQ Parts.
Managerial strengths, when expanding PPQ Parts, must include being able to deal with many different types of individuals. Managers must be able to communicate with their staff and use the correct terminology that is used in the local communities. This is a very important part of a managers job. They must be able to communicate with their staff and customers on a professional level. A manager must also be able to make quick and responsible decisions when it comes to running the business. Making the right decision can mean everything to a company. When manufacturing parts, quality must always be number one on importance. Quality should never be sacrificed. Not understanding these key important factors to running a business would be weaknesses for a company that could be very costly for a company,
When starting up a business in a new country, many things must be considered. Where the company is going to be set up helps to determine how expensive it will be to get the business up and running. A higher cost of living will mean that it will also cost more money to run the business. Having proper balance sheets and income statements will help to determine how much money is needed to start up the new location and approximately how long it will take for the new location to turn profits. Without these balance sheets and income statements, a business will not know where they stand financially and will ultimately run their business into the ground (Internal Analysis, n.d.). These income statements will include the cost of goods, payroll costs, production of good costs, and how much it is for the building and electricity and so on.
Short term goals for PPQ are to increase their employees from 5,000 to 10,000 within the next 4 years. Another short term goal would be locate PPQ in Germany and Japan and raise our charity from .5% to 5% of total profits in the next 4 years. SUV Sales growth from 5% to 9% would also be a good short term goal within the next 4 years. Long term goals would be to raise PPQ stocks from $10 to $22 per share and the annual turnover rate from 25% to 117%.
Japan would have many opportunities for PPQ Parts. Japan holds one of the largest production of vehicles in the world. It would hold many opportunities for PPQ Parts. On the downside to that, it also holds many competitors for PPQ. Another limitation that Japan has is most college graduates join major corporations, and PPQ Parts would have a hard time getting these graduates to join our company.
Germany hold many opportunities as well. Germany can offer great training and educational services when it comes to advertising your business. Competition is still relevant in Germany, but not as fierce as it is in Japan. Germany can also make it difficult for PPQ Parts because certain people work in certain fields. Many are skilled in other professions, this can make it very difficult for PPQ Parts.
Choo, C.W. (2001). Environmental Scanning as Information Seeking and Organizational Learning. Retrieved from
http://informationr.net/ir/7-1/paper112.html Germany. (2013). Retrieved from http://www.heritage.org/index/country/germany Internal Analysis: Strengths and Weaknesses. (n.d.). Retrieved from http://www.larocco forsenate.com/business-tips/internal-analysis-strengths-and-weaknesses/ Japan. (2013). Retrieved from http://www.heritage.org/index/country/japan