Sterling Marking Products Case Study (INTB 6200)
I recommend that Sterling should consider a fully owned subsidiary as an entry mode into the U.K. market. However, we need to ensure U.K. laws permits 100 percent ownership and understand tax incentives applicability. In addition, as an organization we would need to internally develop a strategic road map in terms of our approach to international markets.
The objective of the roadmap is to provide Sterling with some guidance and a broad approach to how we conduct business on a global scale, considering recent interest in our product from firms in other countries and possibility of pursuing those opportunities. As an organization, this is much needed to prevent some of the issues we experienced domestically while establishing our branches in Toronto and Windsor, as well as our recent challenges in the U.S. market with Julius Blumberg Inc.
My recommendation for a fully owned subsidiary in the U.K. is based on the following:
In Europe, U.K. is the only European country where seals are legally required for corporations, and the most populous country in that region (exhibit 1), this continues to make U.K. the most attractive market in Europe for sales, regardless of whether seals might no longer be required in the future. Also, establishing a presence in the U.K. will place Sterling in a position to easily penetrate other European market for future expansion.
Based on a qualitative cost & benefit analysis (exhibit 2), a wholly owned subsidiary provides the most advantage to Sterling. Although this requires the most capital and management commitment, the benefits it offers offsets such costs including full profitability as opposed to a shared profit in case of a joint venture (exhibit 3). Also, in terms of the goals, strategy, resources and organizational structure of Sterling, a subsidiary best enables the firm to reach its objectives (exhibit 4).
Options open to Sterling with a subsidiary is either to purchase a U.K. seal producer (Jordan) or build a branch
The objective of the roadmap is to provide Sterling with some guidance and a broad approach to how we conduct business on a global scale, considering recent interest in our product from firms in other countries and possibility of pursuing those opportunities. As an organization, this is much needed to prevent some of the issues we experienced domestically while establishing our branches in Toronto and Windsor, as well as our recent challenges in the U.S. market with Julius Blumberg Inc.
My recommendation for a fully owned subsidiary in the U.K. is based on the following:
In Europe, U.K. is the only European country where seals are legally required for corporations, and the most populous country in that region (exhibit 1), this continues to make U.K. the most attractive market in Europe for sales, regardless of whether seals might no longer be required in the future. Also, establishing a presence in the U.K. will place Sterling in a position to easily penetrate other European market for future expansion.
Based on a qualitative cost & benefit analysis (exhibit 2), a wholly owned subsidiary provides the most advantage to Sterling. Although this requires the most capital and management commitment, the benefits it offers offsets such costs including full profitability as opposed to a shared profit in case of a joint venture (exhibit 3). Also, in terms of the goals, strategy, resources and organizational structure of Sterling, a subsidiary best enables the firm to reach its objectives (exhibit 4).
Options open to Sterling with a subsidiary is either to purchase a U.K. seal producer (Jordan) or build a branch
References: APPENDIX Exhibit 1: European population growth (1988)