Global Business Report: Alpha Manufacturing's Market Entry Strategy

This report analyzes Alpha Manufacturing, a UK-based metal fabrication company, and its potential for global expansion, specifically focusing on Germany. It begins with an overview of the company and its operations, followed by a detailed comparison of the UK and Germany based on PESTLE analysis (Political, Economic, Social, Technological, Legal, and Environmental factors). The comparison highlights the advantages and disadvantages of each market for Alpha Manufacturing, considering factors such as political stability, economic conditions, social trends, legal regulations, and environmental concerns. The report then explores appropriate modes of market entry for Alpha Manufacturing into the new market, considering various strategies. Finally, it provides recommendations based on the analysis, concluding with a summary of the key findings and their implications for the company's global business strategy. The report emphasizes the importance of adapting to local conditions and leveraging competitive advantages for successful international expansion.

Global Business in Context

Table of Contents
INTRODUCTION...........................................................................................................................1
Company outline..........................................................................................................................1
Comparison of UK with EU country...........................................................................................2
Appropriate mode of entry in the new market.............................................................................6
Recommendations........................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Global business refers companies that operate facilities in many countries around the world
(Peng, 2016). This present study is based on Alpha manufacturing that offers qualitative and cost
effective metal fabrication services. It is going to analyse external environmental factors of the
country in which Alpha manufacturing wants to expand its business. The main reasons behind
comparing external environmental factors of both countries where it operates business and where
it wants to expand business it can take better decision and can know as selected country can be
beneficial for it or not. Lastly, it will discuss some modes of market entry through which it can
enter into new market in an effective manner.
Company outline
In the context of ALPHA manufacturing it can be said that it is a small award winning UK
based custom metal fabrication company. It is the member of Bri-stor group and it is mainly
famous for providing or offering qualitative fabrication in cost effective manner. This company
was founded in the year of 1989. One of the main key of its success is ability of using latent
technology in an effective manner. It is also found that it helps country in improving economic
condition by providing employment opportunity and it has around 100 employees (Alpha
Manufacturing and design LLC, 2016). It produces and provide qualitative sheet metals
fabrication to customers and other main reason that has made it successful is experience of
producing qualitative sheet mental. It wants to compete with other players in the market and for
this it wanted to expand its business in mainland Philippines and Germany. There are several
reasons of expanding business in Germany. It has several departments like marketing, research
and development, production and others that help this company in accomplishing its goals (Li
and et.al., 2018). For more knowing about effectiveness of Germany and country where it wants
to expand it requires detailed analysis of some political factors. Innovation and creativity is main
pillar of its success that can help it out in successful expansion in Germany.
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Comparison of UK with EU country
In regards to German manufacturing where Alpha manufacturing wants to expand its
business it is found that this country has around 2.6% of world production in metal or steel.
Annual production of Germany in steel sector is around 44 million tonnes in the year of 2014. In
regards to steel manufacturing, this country is accounted as the world’s 7th largest steel producer.
It is the reason of Alpha manufacturing of selecting this EU country and by expanding business
in this country it can compete with other international companies and can provide more
employment opportunity. For more knowing effectiveness it is required comparing external
environmental factors of the UK with Germany. Comparison of such factors is:
Political: In regards to Germany it is found that it is dominated by Christian and social
democratic union since 1949. This dominant behaviour affected many of the businesses and its
performance to the great extent. But now some changes have been made in this factor that is
beneficial especially for manufacturing businesses. Current political stability and lack of biased
behaviour, integrity, positivity and honest behaviours of politicians can be profitable for
manufacturing companies. It is also found that companies are legally bound to enforce bribe,
corruption and other acts that can protect them against lawsuit (Eigner and et.al., 2019). It is also
found that Germany is maintaining good relation with other countries like France. These taxation
policy and all acts can help Alpha manufacturing in expanding business effectively. This
alliance is making Germany able to become the most powerful country in the European Union
and Alpha manufacturing can take advantages of it as it can import raw materials and can also
attract global customers in an effective manner.
In regards to UK it is found that it is one of the most powerful courtiers in the world. It is
a modern parliamentary democracy. It is also found that companies think many of the times
before expanding business in this country because of this political factor. All other eternal
environmental factors like economic, technological and social factors also can be influenced by
this political factor. There are some important factors that are being considered by companies
such as: trading policy, funding, grants and initiatives. All these factors are important factors
since Britain is an economic recession. Manufacturing companies require grants and funds from
the government because of economic recession. Due to some economic problems and increasing
rate of unemployment rate, government does not distribute grants and funds among all sectors of
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companies. It can be said that as compared to Britain it can be said that there are strict
regulations and companies have to face some problems for running business in this country.
Economic: There are some economic factors like foreign exchange rate, inflation rate, interest
rate and others can have negative impacts on this company. It is also found that Germany does
not produce raw materials and around 2/3 of energy is being imported from other countries that
can lowers profit margin or can increase cost. It is important for Alpha manufacturing to consider
all these economic factors for expanding business in successful manner. This analysing and
consideration can help it out in using effective strategies. Unemployment rate is also high in this
country but it may be beneficial for Alpha manufacturing as by expanding business in this
country it can employ skilled workforce at lower wages initially. But it is not good for Alpha
manufacturing on the other hand because die to unemployment rate, people do not spend money
in buying such products to the great extent that can lower sales and profit margin. So, it can be
said that this factor has both critical impacts on this company.
Economy is the backbone for UK as it holds the country together. In regards to business
terms it can be said that economy of this country is one of the main priority. There are several
factors that can influence this factor such as home economy situation, overseas economy
situation, and taxation unemployment and inflation rate. In regards to unemployment it is found
that this rate in the UK is increasing each year. Both Germany and UK have unemployment rate
and Britain is facing worst unemployment rate and it is affecting the whole economy of the
country. In regards to inflation rate it can be said that as compared to other countries UK has
better rate and it is one of the main beneficial factor for manufacturing companies since prices
will not fluctuate much and it will remain standard (Vallati and Grassi, 2019). Overseas economy
situation is also doing well and manufacturing companies of this country also striving hard and
helping it out with economic recession because of profits that it receives from overseas
investments.
Social: In regards to population it is stated that Germany has around 82 million residents and
according to the population it is one of the largest EU country. People of this country have
different culture and are adapting modern culture and also focus on improving their living
standard. Different people have different needs and due to multicultural Alpha manufacturing
will require producing variety of qualitative products for satisfying needs of people of Germany,
Satisfying needs of people is one of the main key of success and it can also increase its sales. It is
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also found that modern cultures of people want to buy innovative and attractive products so for
making products differ than other companies; Alpha manufacturing will require focusing on
innovation and creativity. From above discussion of company it is found that it has skilled
workforce that brings uniqueness and innovation so, on this basis it can take advantages of social
factors (PESTLE Analysis of Germany, 2019). In regards to culture of society it is found that
children respect their elders and value of others. It can also be beneficial for this company.
Children take active participation in sports, art that shows that this is multi cultural and creative
culture. Due to having options of shops and unemployment, people have bargaining power that
may lower profit margin. So, it can be said that social factor is in favour of this company.
There are several social factors of the UK that is affecting manufacturing companies to
the great extent. Consumer attitude is one of the main social factors that affect profit margin,
sales and revenue of manufacturing companies. It is found that consumers of the UK are not
price sensitive as they are quality sensitive. They do not feel hesitate to pay higher if they get
qualitative products. So, it can be beneficial for manufacturing companies as Alpha
manufacturing and other companies can increase profit margin by providing innovative, creative
and unique products to customers. On the other hand, there are some other factors that can have
negative impacts on companies and one of the main factor among all of these include: media
views as they can destroy image of any organization very quickly. For manufacturing companies
media is one of the big threats because it highlights and influences some things very quickly such
as labour strike and destroying brand of the company for being in the media competition. It is
also stated that brand image if manufacturing companies of this country is highly appreciated
internationally and one of the main reason behind it is quality of products. So, it can be said that
Alpha manufacturing can expand business in other countries and can attract customers on the
basis of its image and qualitative products.
Legal: Germany has strict laws and government is also strict as it enforces relevant laws to
companies and companies have to abide all rules if they want to run business in an effective
manner. One of the main reasons of government of implementing all rules and acts is protecting
companies against lawsuits and making them able to produce only qualitative products and
satisfy customers. So, it can be said that by implementing safety acts, data protection, equality
and diversity, human rights act, it can satisfy employees and can increase staff retention rate. By
providing qualitative products it can increase customers’ satisfaction rate (Bödding, 2016). By
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doing so and abiding all rules it can take competitive advantages and can expand business
successfully. Coal burning and other process of manufacturing companies can increase pollution
and damages forests so, government is putting pressure on these companies for abiding all rules.
So, by abiding all rules it can help government and environment as well in reducing negative
impacts and improving sustainability. So, in the regard of this factor it can be said that this factor
is beneficial for this company.
Legal factors of UK is mainly related of making new legislations by the government in
order to improve business activities and protecting them against lawsuits and also helping them
out in improving their image.UK is known as one of the best country that have effective legal
system of the world. Government of the UK often develops those legislations that are beneficial
for others and companies and can help their company in improving overall economy. There are
several examples of it and one of the best examples is of 209 when manufacturing and other
companies were facing several problems due to economic recession. At that time government
took effective steps and made several changes or amendments in laws related to tax liability of
corporate sector and it was all done because of making improvement in manufacturing
companies. It is the way how legal factors and government support manufacturing companies in
improving their performance and productivity. So, as compared to Germany, UK is also has
effective legal structure that is beneficial for Alpha manufacturing and other manufacturing
companies.
Environmental: In this regard, it is found that steel manufacturing companies of Germany is
increasing pollution and having negative impacts on environment. People are becoming aware
towards environmental protection but increasing waste and all activities of steel manufacturing
leads waste and pollution. It is not good for this company. But it is found that now companies are
focusing on sustainability as it is the main hot topic and promising of reducing carbon footprint
can satisfy peoples and environmental needs. It can be said that this company can make use of its
ability of adapting changes and require making use of effective strategies. Other environmental
factors like climate and other changes can also become barriers in the path of success. So, overall
it can be said that environmental factors can have some negative impacts so it will require
making use of effective strategies. Global warming and increasing rate of pollution is one of the
main environmental problems of Germany and due to this climate change and global warming,
manufacturing companies can face problems in bringing raw materials and producing products.
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One of the main reasons of it is power station and industrial processes. So it is important for
Alpha manufacturing to focus on using effective strategies for reducing wastes and improving
quality.
People of UK are very concerned about environment and focusing on sustainability
because they have now known that man made wastes is one of the main reason of increasing
pollution. They have also known that pollution is affecting their health and many sectors to the
great extent in negative manner. As compared to Germany it can be said that UK has more
environmental problems and it will be beneficial if it enters and expands its business in Germany
and by using some tools it can maintain sustainability. So, for maintaining sustainability,
companies require implementing all rules and regulations related to environmental protection
and reducing wastes (Shalhoub, Marshall and Ippolito, 2017). There are several laws and
regulations that are binding manufacturing companies to abide all rules and if they do not abide
all rules then they have to pay penalties.
Appropriate mode of entry in the new market
Three are different modes of entering in the market but for entering in the market in cost
effective manner, there is requirement of analysing all different types of market entry modes.
Some different modes of market entry include: Licensing, franchising, buying a company, direct
exporting and joint ventures. Alpha manufacturing has an effective image in the market and it
wants to expand its business in Germany so, it will be beneficial for company to focus on either
joint venture or licensing.
Licensing: It is one of the effective business arrangements in which company given permission
to another company to manufacture their products in return of specific payment. In this effective
foreign market entry mode licensor makes limited rights as well as resources available to the
licensee in the host country. In this mode, licensee or Alpha manufacturing can take some rights
and resources of well known company of German and can take several advantages of selling
their manufactured products and services in the market (GUARESCHI, 2018). There are several
advantages of this mode of market entry and reasons that shows effectiveness of reasons of
choosing this mode by Alpha manufacturing such as:
Advantages
 There are huge chances for company to earn passive income.
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 It provides better business opportunities.
 As compared to other modes of entry, it reduces risks for both companies.
 It is one of the effective and easiest mode of entry.
 It is cost effective market entry mode because in this type, Licensee Company does not
require investing in promotional and advertising and can attract customers to the great
extent.
 It also provides opportunity and freedom to licensee to develop a unique marketing
approach.
There are some limitations of this mode of market entry that may create some problems for
Alpha manufacturing. But by identifying disadvantages it can develop other effective strategy for
reducing all these negative impacts and disadvantages that are:
Disadvantages
 There is risk of theft of intellectual property.
 Licensee becomes dependent on licensor for some things and they have to take
permission from licensor before making any changes in anything.
 It can increase added competition in the marketplace.
 It may damage reputation of both parties if one party commit mistake.
 It does not give a guarantee of revenue.
So, from above discussed all advantages and disadvantages it can clearly be said that it is
beneficial for this company for expanding business and entering into new country as it has
several advantages rather than disadvantages.
Recommendations
From above study it has found that some factors are not in the favour of Alpha
manufacturing company so, it requires focusing on implementing some strategies. It is found that
steel manufacturing increases pollution so, it can be recommended to this company that it should
focus on using six sigma as well as total quality management approaches. Both approaches
can help it out in reducing wastes and producing only qualitative products. With six sigma, it can
reduce defects and errors in the process of manufacturing that leads manufacturing of qualitative
products. In regards to market entry mode, it is found that licensing it has some disadvantages so
it can make use of joint venture. It is a mode of market entry in which 2 or more than 2 parties
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agree to pool their resources and performing business activities and running business for
accomplishing same goals (Kanmani and Vasantham, 2018). In this type, there is no requirement
for one company to invest amount to the great extent, risks can also be divided among all parties
as per their share. So, by doing this it can have positive environmental impacts and can expand
business successfully.
CONCLUSION
From the above study it has been summarized that analysis of external environmental factors
play a vital role as it provides right direction to company about taking decision regarding
expansion of business. Comparison of external environmental factors like political, economic,
social, legal and environmental of two countries where company already has it business and
where it wants to expand, it can identify effectiveness and can make expansion successful.
Further, it has discussed some advantages and disadvantages of market entry mode licensing for
company that wants to expand its business in other country.
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REFERENCES
Books and Journals
Bödding, M., 2016. From market development to superior value proposition: a due diligence
analysis of providing the engineering and consultancy services of Tebodin Netherlands
BV to German industrial market sectors (Master's thesis, University of Twente).
Eigner, I. and et.al., 2019. Success factors for national eHealth strategies: a comparative analysis
of the Australian and German eHealth system. International Journal of Networking and
Virtual Organisations, 21(4), pp.399-424.
GUARESCHI, E., 2018. LICENSING AND THE EYEWEAR MARKET: LUXOTTICA
STRATEGY IN THE CHINESE MARKET.
Kanmani, M.D. and Vasantham, S.T., 2018. SIX SIGMA AND TOTAL QUALITY
MANAGEMENT. Editorial Board, 7(1), p.266.
Li, X.P. and et.al., 2018. Additive manufacturing of a novel alpha titanium alloy from
commercially pure titanium with minor addition of Mo2C. Materialia, 4, pp.227-236.
Peng, M.W., 2016. Global business. Cengage learning.
Shalhoub, J., Marshall, D.C. and Ippolito, K., 2017. Perspectives on procedure-based
assessments: a thematic analysis of semistructured interviews with 10 UK surgical
trainees. BMJ open, 7(3), p.e013417.
Vallati, M. and Grassi, A., 2019, July. AI to Facilitate Legal Analysis in the PESTLE Context.
In The EMerging Technology conference (EMiT) 2019 (pp. 66-68). IET.
Online
PESTLE Analysis of Germany. 2019. [Online]. Available through <
https://howandwhat.net/pestel-analysis-germany/>
Alpha Manufacturing and design LLC. 2016. [Online]. Available through < http://www.alpha-
mfg.com/>
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