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The NFL Company should expand outside the United States into Germany for various reasons. In this regard, there are various factors that make the Germany attractive. These include external factors, customer/competitor based-factors, and industry-related factors. The external factors that make the Germany market suitable include inflation rates, free market system, and political stability.
In terms of inflation rates, Germany has a relatively high inflation rate as compared to other countries. Inflation rate refers to the rate at which the currency of a certain country loses its value relative to other countries’ currencies. This means the prices of goods and services in the country have been rising significantly in the past few years.Another external factor that makes the Germany market attractive is political stability. The country has been politically stable for several decades. The political stability of the country is very suitable for conducting business operations by NFL. This is because the business will not be disrupted by the political climate in the country. Moreover, there is a very low likelihood that the Germany government will be destabilized by violent of unconstitutional means such as terrorism and politically-motivated violence.
In addition, the country practices the free market system. In a matter of policy, Germany encourages foreign investors to invest in the country. In this regard, the country has an investment promotion agency called “Invest in Germany” aimed at attracting as well as assisting foreign investors. Additionally, Germany is still liberalizing the legislation regarding direct foreign investment in order to conform to the standards set by the European Union (EU). This is very suitable for NFL business operations in the country.
In terms of corruption levels, Germany is ranked as one of the least corrupt nations globally. This means that business operations in the country are performed with a high degree of transparency. This is very suitable for the company in the sense that corruption does not form a constraint to investment or trade in the country. Both pretty bribery and administrative corruption are nearly non-existent in Germany. According to the Germany Penal Code, money laundering, breach of trust, extortion, fraud, trading influence passive and active bribery constitutes criminal offences.
On the other hand, one of the competitor/customer-based factors that make Germany attractive includes low level of competition in the industry. In this regard, the country has few companies that produce fragrances. However, NFL may experience stiff competition from already existing companies in the German industry. This will make it very unsuitable or difficult for the company to make remain profitable in the short run.
Another customer-based factor that makes the Germany market attractive is the product availability to meet the consumer’s needs. NFL makes products and fragrances meant to meet the needs of all costumers. In fact, these products and fragrances are based on the Western and Arabic influences. As such, they will meet the needs of the Germans. In general, NFL’ services are very suitable for the Germany market.
In terms of industry and business-related factors, Germany has relatively less import restrictions and trade barriers. In this regard, the so-called Innovation Germany helps exporters in marketing their services locally. Other than agricultural products, Germany allows potential exporters to the country in all its sectors of the economy. Generally, the lack of trade barriers in the country is very suitable for conducting business operations in the country.
Another business related factor is suitable labour force availability. In this case, Germany has plenty of highly qualified labour force that can assist the company in its internationalization strategy. However, this labour force may be costly and thus making it less suitable for the company to use German labour force but rather local labour force.
In terms of cost of establishment, it is relatively easy to locate business in Germany because of the simple and easy procedures needed to obtain a trading licence. This is very suitable for NFL in that it will reduce the company’s overhead costs.
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In terms of transport, it will be relatively expensive to transport the products by air than to transport them by sea. However, sea transport is slow and thus making air transport the suitable option. In this regard, the NFL can use low-cost aircrafts such as Etihad Airways to reduce its transportation costs.
The company should use an effective and efficient marketing mix and staffing policy. In regards to the product strategy, the NFL’ products are tailored to meet the needs of all the customers. In addition, the company has a wide range of products and fragrances from which the customers can choose from. This will ensure that all the needs all types of customers are met. In regard to the place strategy, the company should ensure that they establish their presence in all market segments existing in Germany. However, this may be a costly exercise.
The company can use both online and on ground means to reach all customers. The products should be located in both the supermarkets and boutiques. In regard to price strategy, the company should engage in pricing wars with the major competitors in the Germany market. This could be achieved by offering their products and fragrances at relatively less prices relative to the competitors’ products. On the other hand, promotion is another important strategy; in this case, the company should use various promotional strategies in order to create brand awareness. In fact, the company should use more financial resources in its first year of operation in Germany to create brand awareness. The promotional tools to be used include radio, TV, magazines, newspapers, and billboards.
On the other hand, the company should also chose the most effective HRM staffing policy. In this regard, the company should use geocentric staffing approach in order to get the best employees to run its business in Germany. This policy assigns the available job positions to the most suitable candidates irrespective of their country of origin, or background. This staffing approach has various advantages. One, it will provide the company an opportunity to hire expatriates who have a thorough knowledge of their country. This will ensure that the company has a good understanding of the global perspective. It is also cheaper than other HRM staffing policies including ethnocentric and polycentric policies. Moreover, this policy also creates a platform for establishing global managers who could be deployed at the company’s subsidiaries in Germany.
There are six major Entry Modes for internationalization. These include licensing, international distributors and international agents, strategic alliances, joint ventures, international sales subsidiary or overseas manufacture. International sales mode is cost-effective and simple to carry out. On the other hand, international distributors have adequate knowledge of the market and well-established market contacts. Similarly, a joint venture with the country’s local business partners is important in that it these local business partners have adequate knowledge of the market and well-established market contacts. One of the benefits of strategic alliances is that it can help the company to gain expertise and knowledge. It can also assist the company to gain a competitive advantage. Another benefit of strategic alliance is that it results in the sharing of risks among the firms involved. Thus, the best entry mode for NFL is strategic alliance due to the various benefits discussed earlier.
The most suitable strategy for international business operations is global standardization. Global standardization refers to the ability of the company to employ standard marketing in its international business operations. This market entry strategy is important in that it will facilitate the company’s products to have the same appeal to customers globally. Another advantage of this strategy is that it can be used in various regions across the world and hence reducing costs associated with developing different marketing strategies for different markets. It will also assist the company to create a strong brand.
