The most fundamental frontier for growth in international business is making the franchise and international business entity. Well-established always look beyond the local and national market to tap the opportunities available in the other countries (Hill 1). Making a business to go international is not a new strategy in the business world. However, O’Mart Organic Market (OOM) needs careful planning and analysis of the market because of the nature of international business. Opening five branches in five different cities in China is a good plan that will maximize the huge Chinese market, given the population of the country.
Key Activities Required by Value Proposition
The first action is to conduct an analysis of the Chinese market and the patterns of the consumers. OOM management must understand the consumer patterns to enable them determine the optimal time to set up the branches. OOM branches will record good performance and minimal loss if the establishment happens when the company expects the most profit.
Another important activity is budgeting. It is important to estimate the amount of capital required to set up the branches and begin trading. A budget will estimate the expected cost incurred by the supermarket and the expected revenue generated when business commences.
It is also important to recruit employees who will work in the established branches. The management must decide whether it will send foreign employees to work in China or whether it will use only Chinese employees or both options.
In the plan to expand to China, it is important to establish efficient distribution channels. First, the supplies transported to Costa Rica for transporting to China must have and an appropriate schedule to avoid and minimize delay. The company can use air transport for efficiency and speed. The plan should incorporate two airlines to reduce the chances of failure in case of logistic problems.
The best way to understand customer relationship is by understanding the cultural attributes. Good customer relationship is important for attracting and retaining the customers of the organization. In order to maximize on the value of the customers, OOM should use Chinese employees for the five branches to serve the customers. Chinese employees understand the needs of their people better than the Canadian exported employees do.
The management needs to maximize the revenue streams of the franchise by ensuring they set the standards that guarantee the satisfaction of the customer. OOM must have a method of ensuring that the food supplied meets the nutritional expectation of the customers. The franchise can outsource the service to another company that checks the quality of goods supplied to consumers. The revenue stream also includes the mode of paying for the services by the consumer. It should be fast, safe, convenient, and less costly for the consumer and the organization too.
OOM must insist on production of quality products for the customers since it deals in food products. Production must meet the expected level of demand in China with some buffer stock preserved for the prevention of cost incurred in case of a shortage of in the stock.
The management must come up with good communication channels to ensure that complaints from the customers do not take long before addressing. OMM should maintain an efficient customer care system, committed to addressing the problems from the customers. In addition, the Human Resources department must address the problems relating to the employees very rapidly.
The franchise must have an efficient network to maintain its competitive advantage over the other players in the industry. If an opportunity exists within another area of the market within the reach of the organization, the platform must put it in a position to acquire the information faster.
3. Cost structure
Most Important Costs
The most important and inherent costs in the business include the cost of transporting the supplies. The organization must shoulder the cost of moving goods from Canada to China through Costa Rica. Other inherent costs include the cost of constructing the branches in the five cities and the cost of recruiting employees to start work in the five stores together with their remuneration. The organization will also incur logistics costs of warehousing and the rental fees of the store.
The most expensive resources are the construction materials necessary for the successful physical establishment of the five branches. It is also expensive to transport the supplies from Canada to China through Costa Rica. Apart from the fees paid to the transport agent, the organization will also pay clearance fees across the national borders and insurance for the goods in transit. Many transport agencies require insurance of goods by the sender leading to increased costs.
The organization also requires a state-of-the-art freezer to ensure that supplies made are still fresh by the time they get to the intended destination in China. Customers cannot purchase bad supplies because the must receive equal value for the services that they pay.
Customers are willing to pay as much as possible for the best quality of services. The food supplied by the organization into the market must meet the nutritional value and pose no risk to their health in any way. It is important for an organization to deliver these quality services while maintaining affordable prices for the consumer. Affordable prices also attract more customers, which improves the overall profitability of the customers.
Currently, the consumers are paying for good quality organic and natural products for consumption ranging from fresh fruits, vegetables, and spices. The range of products is both natural and processed depending on the preference of the consumers. Currently, consumers pay through cash or credit cards by physically visiting the stores. The products have dynamic prices because they of different constituents and nutritional value.
Consumers would prefer to maintain the same method of payment, either cash or credit cards. However, OOM can improve the system by enabling online purchases in China. The organization can allow consumers to order goods through online shopping mechanism and the organization incurs the delivery cost. In this method, payment happens through credit cards where the organization deducts the amount in the transaction from the customers balance.
Other sources of revenue for the organization include sale of fixed assets that are no longer useful to the organization. The organization may also become a registered company in China and trade its current assets such as stock and other shares for the generation of revenue. The pricing mechanism may incorporate fixed pricing for the shares at a relatively low price to attract customers in the Initial Public Offer.
Hill, Charles W. L. International Business: Competing in the Global Marketplace. Boston, Mass: McGraw-Hill/Irwin, 2003. Print.