Case Study: Assessing ECC's Global Market Expansion Strategies

This case study examines East Coast Coal Ltd (ECC) and its strategic decisions regarding global market expansion. Faced with increasing costs associated with exporting coal, ECC is considering two primary options: acquiring a coal mine in Indonesia or diversifying its resource production through a ...Read More

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Financial Markets and Economic principles
Name
Institution

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Introduction
Globalization of markets has revolutionized the world of business in this century. It has
positively affected the economic processes, transactions, and investors in a broad
perspective. Despite its diverse opportunities, it objects the usual norms and behavior thus
requires a different mindset. According to Zou (2001) was in a dilemma of whether global
marketing affects the organization's overall performance.
Globalization marketing is the act of an organization with an aim of focusing its
operations and resources on the global market in order to harvest the opportunities
attached in the international marketing arena (Zou, 2001). East Cost Limited has realized
these kinds of opportunities and now they have the plan of not only exporting their
products but also to establish another production base in an overseas country. According to
Gillespie (2007), nowadays nearly every organization should compete in the international
marketplace to gain a competitive advantage.
Expansion is the ideal goal for any business organization. A business initially starts with a
small production index due to inconveniences such as little start-up capital and minimal
knowledge about the market. Like in the case of ECC, it was limited in capital thereby
relying on shares from board members and private investors. With the drive of stable
management, it prospered greatly in the coal production industry which made them acquire
two extra mines, therefore, expanding their empire in the region.
As a result of a prosperous regional expansion, ECC started exporting coal to foreign
countries which had to be transported to the shipping facilities. This was a positive trend

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though it was faced by a number of challenges. Transporting tons of coal to the offshore
became more expensive due to government interference on imposing a tax.
With a concern ongoing international, ECC has two options; to purchase a coal mine in
Indonesia or to diversify its resource production by merging with a gas production
company based in Australia (Cho and Kang, 2001). These two considerations are briefly
discussed in this paper.
Acquiring a coal mine in Indonesia v/s Partnership with a Gas Company
A mechanism that can see into rapid development of a company in the global market isby
forming relationships with the other companies in different countries (Aaker, 2010)
although globalization is associated with the following issues.
Issues in global markets
There is non-specification of countries. Globalization is viewed from a broad perspective.
You will hear someone saying I am shifting to Africa; the problem is they don't say which
country in particular. The advantage ECC has is that it already knows the specific country
it has to operate from (Indonesia). Expanding into other countries builds customer
confidence since it’s very difficult for it to collapse (Chae, 2000). For this reason, the
company will maintain both local and international customers hence inviting more
investors to finance its operations although one has to know specifically where he/she is
going to set the business.
Even though globalization will make a company be able to negotiate contracts using a
common currency (USD) that is very difficult to fluctuate as demonstrated by Sheth

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(2001), lack of global logistics becomes an issue since the company has less knowledge on
how operations are carried out internationally. The sweet part with ECC is that it has
operated in other countries already thus it won’t suffer much.
Due to language barriers and cultural differences, ECC will be required to hire new
employees who are familiar with Indonesian territory (Gordon, 2004). The problem is that
one has never worked with this people thus integrating with them will become a major
challenge. Since ECC has ever operated internationally, getting to work with this people
would not be difficult.
Product customization and standardization may also be a great challenge since the
company has not adapted to the product offered in the new marketplace (Ocloo, 2014). For
ECC to negotiate for a standard selling price that will ensure profits and not undermine
customers in that country will be a challenge.
Navigating through the marketing channels will also be an issue because one is not
familiar with the new market. One has to conduct more special and complicated market
researches that will enable them to enter in the market healthy. ECC has operated
internationally hence they know channels to use to source market.
Conclusions and Recommendations
Globalization comes with both pros and cons but the advantages outweigh the
disadvantages. I recommend ECC to go for the Indonesian for it to realize the projected
tonnage production and increase marketplace for it to achieve the profits it had set to
accumulate that financial year. Globalization will also help them keep more investors to
finance their operations. Consequently, they will adapt to newer mining technologies.

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Since they are being charged heavily to transport coal using railway and exploitation from
private ports, globalization offers an ideal alternative.

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References
Aaker, D.A. and McLoughlin, D., 2010. Strategic market management: global perspectives.
New York. John Wiley & Sons.
Chae, M.S., and Hill, J.S., 2000. Determinants and benefits of global strategic marketing
planning formality.International Marketing Review, 17(6), pp.538-563.
Cho, J. and Kang, J., 2001. Benefits and challenges of global sourcing: perceptions of US
apparel retail firms. International marketing review, 18(5), pp.542-561.
Gillespie, K., Jean-Pierre Jeannet in David H. Hennessey. 2007. Ferndown, UK. Global
marketing.
Gordon, K., 2004. Pros and Cons of Expanding Your Product Line.Boston. BHarvard University
School of Management.
Ocloo, C. E., Akaba, S. and Worwui-Brown, D. K., 2014. Globalization and
competitiveness: Challenges of small and medium enterprises (SMEs) in Accra, Ghana.
International Journal of Business and Social Science, 5(4).
Sheth, J.N. and Parvatiyar, A., 2001. The antecedents and consequences of integrated
global marketing. International Marketing Review, 18(1), pp.16-29.
Zou, S. and Cavusgil, S.T., 2002. The GMS: A broad conceptualization of global
marketing strategy and its effect on firm performance. Journal of marketing, 66(4), pp.40-
56.