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Essay Example: Toolstation's Potential Expansion Strategy to Australia

5 pages
1192 words
Vanderbilt University
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Expansion of any business or organisation is always a desire of the management of most corporations if not all. This is because development will help the organisation in commanding a more significant percentage of the market share which will, in the long run, lead to increased profits. Moreover, expansion of an organisation will enable the organisation not to be faced out in the market with its competitors. This, therefore, necessitates the management to make critical decisions that will allow the expansion of the organisation to be successful. If development is not adequately evaluated by the control, then the organisation may experience a considerable loss and even collapse at all.

Overview of Toolstation Company

Toolstation is a company which is based in the United Kingdom, and it is one of the fast-growing organisations. The company specialises in the supply of construction tools and accessories among many other home improvers. The company has eased its operations by permitting online purchase for its customers. This has allowed the business to operate for many hours and it has created a lot of convenience to its customers across the vast branches the company poses in the United Kingdom. Moreover, the company is even offering just more than tools. It provides to its customers fixing material, materials for plumbing, screws which are being stocked and displayed online for the customers.

Toolstation company started its operations in the year 2003, and the company affairs are being managed by a pool of qualified management which has brought it this far. The management aim is to work with maximum efficiency by keeping the cost low as possible and maximising the sales. With this ability, it has been every worker dream to work in Toolstation Company.

Analysis of External environment in the United Kingdom

Analysis of the political, economic, social, technological, environmental and legal factors in the home country of the company was a critical factor to evaluate before the expansion strategy could be undertaken in Australia. These are macro forces or factors that are affecting Toolstation Company operation, and they are beyond the control of the Company. About the political environment in the United Kingdom, The government of the United Kingdom has enabled a smooth operation of the business in the country this is by creating an enabling environment which is politically stable. This is the reason why Toolstation Company has opened many branches across the United Kingdom.

The second external environmental factor is the Economic factor in the United Kingdom. Factors such as the inflation rates, interest rates and economic growth have been stable in the United Kingdom and hence have not affected the operation of Toolstation Company. Without this stability, the company would not have been experiencing rapid growth. Moreover, the social factors such as population growth rate in the United Kingdom have helped the Company to enjoy a vast extensive market for its products.

Additionally, social factors such as the attitude of consumers towards Toolstation products have been a positive attitude making it sell its products in most parts of the United Kingdom. Besides this, the Company has been successful in utilising the most recent technologies to curb its competitors. This has enabled Toolstation Company to redefine its products across the United Kingdom. On the other hand, environmental factors have been critical in the recent time due to the reduced supply of raw materials and also conducting of business becoming an ethical consideration in the most recent time. Environmental factors have made consumers of Toolstation Company ensure that the companys products are sourced ethically.

The Company has as well complied with legal factors in the country. This factors including, health and safety, Product and consumer right laws, product safety and labelling. This has enabled the company to operate without interruptions of down closure.

Analysis of external Environment in the Target country

For Toolstation Company to operate in Australia, Australia must have favourable political, environmental, social, technological, economic and legal factors. The government of Australia has been stable regarding politics and economy. The economy has been steady and political environment has been favourable. It is why Toolstation Company wants to expand its operation in Australia. In addition to this, socio-cultural factors, Environmental and legal rules that have been placed by the government of Australia has enabled much organisation in Australia to thrive with rapid growth. With these favourable constitutional and environmental factors in Australia, Toolstation wishes to extend its operation in Australia.

Internationalism Drivers and Scenarios

Toolstation Company wants to operate in Australia because of many drivers. For one reason, the needs and preference for the companys products from the customer has become similar. Another driver is for the company to produce its products in a more recent technology and to acquire more current information about the market in which it wants to sell its products. Moreover, the company may operate at a low cost if it works in more than one country for instance reduction in labour cost. In summary, Toolstation drivers to operate internationally include: to diversify the Companies products, to expand the scale of operation, cheap cost of production and to sustain competitive advantage abroad.

SWOT analysis

The Companies strengths include its ability to continually improve its products regarding redesign and needs that are in line with the changing needs of the customer. However, the company experiences a weakness in that the management to do pay too much attention to marketing. The opportunity the company has is to operate internationally and also to sell its products over the internet. The firm faces such threats as increase stiff competition from the company offering similar products.

Analysis of Opportunities and Constraint Faced In Australia

The possibility the Company is likely to face in Australia is the offering of a new or diversified product in the Australian market. This may later lead to increased sales if the products meet the target market expectation. However, Toolstation is likely to face strict legal rules of operation and compliance of foreign Companys in Australia.

Internationalisation strategy in Australia

The market entry mode for Toolstation Company in Australia can be achieved through direct investment mode. It entails direct ownership of facilities in Australia and also establishing a new enterprise in the country. This entry mode is suitable because it allows a higher degree of control of the affairs of the company. However, a higher degree of commitment has to be exercised to achieve this entry mode. Once this is accomplished the Company can use various advertisement strategies to create awareness of its products in the country and how the products are designed to meet the customers needs. At the inception, the Company need to charge a price that is slightly below the competitors price to increase its customer base.

Conclusion and Recommendation

Expansion strategy is a critical decision that an organisation management needs to analyse and evaluate with serious commitment before implementing it. Consideration such as financial status, products and foreign market entry modes has to be taken into account. Moreover, the external and internal environment of the organisation has to be adequately analysed, and for sure the strategy will be successful. I can recommend that foreign company laws operation should be relaxed to promote increased trade among different borders and nations.

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