PPQ Parts is a distributional company which aims at providing international expansion to Germany and Japan.
There are a lot of different purposes and strategic goals which should be met to reach this aim. The strategic management plan provided in this report is going to cover some specific areas, like location consideration, managerial and financial strengths and weaknesses, economic, competition, and political environment, and short-term and long-term strategic goals of the company.
Environmental conditions in the sphere of global expansion including economy, competition, and political stability
Being a distributional company, PPQ Parts works only on the territory of the USA but wants to provide its influence all over the world. Conducting an analysis of the economic position in the whole world, it should be stated that the crisis effects are reducing that makes it possible for the economy development.
Thus, if the real GDP growth in the world was -0.9 in 2009, not it is 3.8 and the forecasts show that it is going to be 3.5 the next year (Economic forecast, 2010). The distributional institution at the international arena is really necessary for the long term periods as the demand on different products increases. Moreover, the residual effects of the economic crisis allow this kind of business to develop and flourish in a number of reasons.
It is crucial to state that demand plays a vital role in this process (O’Hara, 2006). The competition in the sphere has always been strong, so much effort should be made to enter the international distributional market. Moreover, the company which enters the international market for the first time always feels more tension from the side of other members of the market than those who have already entered it. The world market members unwillingly allow new entrants to become the part of their business as this increases the competition and makes some companies leave the market.
In the relation to political environment, it supports the international business development. In spite of the fact that political environment in most cases is strong and tense, the current situation is stable and there are no essential hazards that can influence the distributional business.
Managerial and financial strengths and weaknesses
The international expansion involves a number of different challenges which may be faced. The international arena involves the notion of the multiculturalism. Thus, managers may face the problem of multicultural barrier in the work at the world market. It is crucial to consider the main principles of work with clients and running business in the counties where the company wants to expand to, Germany and Japan in our case. Germany and Japan are the countries which development may be identified as stable and successful. Still, there are some tendencies which may create a number of problems.
Therefore, Japan development is unbalanced that may create a number of problems in the future. It is important to note that the developed countries invest in the business on their territory and invite the international companies if the local ones do not cope with the amount of work which should be done. The main weakness of the managerial and financial sphere is that it is more difficult to organize the business on the distance. The main office should be created in the country for running and monitoring the business.
When the work will be completed and arranged, the office in another country is going to be the company strength.
Short-term and long-term strategic goals
Planning to enter the international market and to increase the global expansion, PPQ Parts is planning to reach the following short-term and long-term strategic goals. Firstly, it is natural that the increase of the company influence presupposes the increase of the employees. Thus, the company is planning to increase the number of employees from 5,000 up to 10,000 in four years. Secondly, it is obvious that the international expansion requires from the company to increase its building potential worldwide. The warehouses in different countries are extremely necessary for the international distributional company.
Thus, the company is working on the increase of buildings which are going to be used beyond the territory of the USA. Entering the international market, the company is planning to increase its small SUVs market share from 5% up to 9% in the next four years. Within this problem, it should be stated that the current stock price is considered to be $10 per share, while the company’s goal is to increase it up to $22 per share. Having a 6% profit margin in 3 year average, and the same level of industry average during this time, the company wants to reach the activity of 13% in four years. The industry average activity of the employee turnover comprises 25%.
It should be mentioned that the employee turnover in the company has been 28% for the last 3 years. This activity should be reduced and the company wants to lower it up to 17% in the nearest 4 years. The company supports local communities and contributes to their business. The company donates 0.5% of its profit to this sphere. Being a company value, it wants to increase this charity rate up to 5%. Thus, here are the short-term and long-term strategic goals the company wants to reach with the help of the chosen strategy of entering the international market.
Location benefits and limitations
Having considered some information, it is possible to state that the labor power involved in the distributional sector in Japan is much lower than that involved in the USA. It may be concluded that the location of the PPQ Parts in Japan is a successful decision due to the fact that this territory needs more distributional companies (Miwa, Nishimura, & Ramseyer, 2002). Germany is a perfect company for locating the PPQ Parts distributional facilities, as the country lacks the distributional services in the following sectors of the economics and industries, chemicals, financial institutions, food and luxury goods, etc. (Wiedenfels, 2009).
Moreover, Germany is located in Europe and Japan is an Asian country. The company location strategy may be easily understood. The desire to enter the European and Asian markets may be rather successful in the future from the point of view of the possibilities to increasing PPQ Parts business in other countries of Europe and Asia. Thus, the company will have to spend much effort on establishing contacts with German and Japanese neighbors. In conclusion it should be stated that PPQ Parts is the company with good strategic goals and strong position. Setting the short-term goals on entering the German and Japan markets, the company establishes the long-term strategic goals for becoming one of the leading distributional companies at the European and Asian markets.
Moreover, the political and economical environments are rater successful in those countries and the countries have managed to come out of a recession fast.
(2010). Economic forecast.
Country Report. Germany, (4), 6. Miwa, Y.
, Nishimura, K., & Ramseyer J. M. (2002).
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Wiedenfels, G. (2009). Trust of potential buyers in new entrepreneurial ventures: an analysis of trust drivers, the relevance for purchase intentions, and the moderating effect of product or service qualities. Wiesbaden: Gabler Verlag, 2009.