Question

While at university, a friend of yours who is studying information systems developed a computer program that can predict stock price fluctuations faster than existing products. You and he have built a solid, growing business in Australia, selling and servicing this software package to stockbroking firms and in a cut down version, to professional private investors and ‘day traders’. Sales have recently slowed in Australia because the local market is quite saturated and mature; however upgrades and servicing of existing clients continues to be profitable. As the business owners and founders, you have decided to expand overseas and are considering the following questions, being discussed at your strategy meeting.

1 Which countries will be most attractive to go to in the first instance, and what are the criteria for choosing these?

2 Should your firm go it alone or seek to partner with firms in those countries, or acquire businesses there as a platform?

3 What staffing capability will be required to expand outside Australia?

4 Should you expect that the product will need no adaptation or some changes for foreign markets?

5 Will economic and business conditions, cultures, costs, wages and prices be the same overseas?

6 What are the key risks of overseas expansion and how will you manage them?7 How can you best plan, organise, lead and control your overseas expansion?

Answer 1

The criteria for choosing countries to expand to should include factors such as market size, growth potential, regulatory environment, cultural similarities, language, and ease of doing business. Some potentially attractive countries for information systems software could include the United States, Canada, the United Kingdom, Japan, and Singapore.

It may be beneficial to seek out partnerships or acquisitions with existing businesses in target countries, as this can provide local expertise and reduce barriers to entry. However, going it alone may also be a viable option depending on the specific market and business needs.

Staffing requirements will depend on the scope and scale of the expansion, but may include hiring sales and marketing professionals, product development teams, and support staff. It may also be necessary to engage with local recruitment agencies or consultants to assist with finding and retaining top talent.

Some adaptation of the product may be necessary for foreign markets, as regulatory requirements and customer preferences may differ. Conducting thorough market research and customer testing can help identify areas for customization or localization.

Economic and business conditions, cultures, costs, wages, and prices will vary by country and region. Understanding these differences and developing strategies to address them will be critical to successful expansion.

Key risks of overseas expansion may include political instability, economic volatility, cultural misunderstandings, legal barriers, and competition. Mitigating these risks may involve conducting detailed risk assessments, establishing contingency plans, and building strong partnerships with local stakeholders.

successful planning, organizing, leading, and controlling of overseas expansion can be achieved through effective project management, clear communication among team members, and setting clear goals and metrics for progress and success. Regular monitoring and evaluation of performance will also be critical to adapting to changing market conditions and achieving long-term success.

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