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International Expansion of Business


100 points possible: You, as a recent graduate of the VCU School of Business (where your skills in international marketing have been sharpened considerably) are considered to be one of the “best and brightest” of the new generation of global thinking young business managers. You are also an adventurous type, and as such are not ready to settle down in the U.S. right away. Because of this, you have spent a good deal of time exploring your employment options and after much deliberation on the numerous opportunities before you, have taken a job with a small business firm located in Melbourne, Australia. While you had many offers to work with larger, well established multinational firms located around the world, you chose to accept this smaller firm’s offer because you thought it would give you more opportunity to hone you strategic management skills, take responsibility, make decisions and see part of the world you have not seen before. Some challenges appear to be in the making, however. Your new firm is called “Housing for the New Middle Class (HNMC).” This firm has grown rapidly by supplying the Australian market with high quality but very affordable “modular housing,” particularly to the growing middle class consumer market. This “Australian” middle class consumer market has been expanding rapidly because of the increase in immigration of highly skilled individuals into Australia from around the world (particularly from South East and South Asia). Australia is an economy in transition, going from a commodity export dependent country to an information technology, service oriented economy. In short, it is moving from the “old economy” to the “new economy,” in an environment that is rapidly “globalizing” and this trend is not likely to change. As such, the demand in Australia for highly skilled, value adding individuals (again, primarily derived from the immigration of people with such skills from outside the country, particularly places like Malaysia, Indonesia, Thailand and India) is forecast to continue at an increasing rate. Based on this rosy picture of Australia’s future economic prospects the owners of HNMC (your new employer) see only continuing upward demand for their product (high quality, affordable middle class modular housing) in the domestic market. Your challenge lies in the fact that you have a vision to take the company “global.” p. 2 VCU School of Business – Dr. Van R. Wood MKTG 320 – Summer 2011 Midterm Exam You think that not only is there an opportunity to significantly grow HNMC’s revenues by dramatically increasing its presence in overseas markets, but that by doing so you and your company can make a significant contribution to societies around the world (indeed, if you can offer the burgeoning middle class markets around the world affordable, quality housing, it might just have mattered that you were on this planet after all. Your desire to make a contribution, as well as make a “buck” is significant.). Your new employer sees your “vision” of as a risky undertaking. “Why should we venture into unknown foreign markets, where we don’t know anything, when our local Australian market is doing so well and is projected to continue doing well in the future?” This is the standard objection you have heard every time you have brought up the subject. But you have been persistent, and the owners of the company have decided that if you can convince the HNMC Board of Directors to buy into your “vision,” then it will be given real consideration. However, if the Board rejects your “vision” then you must agree to focus on the local domestic market (i.e., Australia) and put your “global” ideas behind you. You have been asked to present a report to the Board of HNMC in one week. Issue: What wil


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