BUSINESS

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Business

Introduction

This report deals with the internationalization of a Japanese company called Elecdyne. Elecdyne is located in Tokyo, Japan, and has manufactured electronic consumer goods since 1990. At the moment Elecdyne employs 100 staff to manufacture products such as DVD players, VCR players, mp3 players and hifi equipment. Currently Elecdyne supplies products to the Japanese market however it has failed to grow its business in the last two years. This is mainly because of the licenses they have to pay, high wages compared to other countries and lack of R&D staff. Furthermore it is facing a highly competitive market in terms of technology change and innovation. Therefore Elecdyne is keen to internationalize to another country. This country has to provide Elecdyne with:

* Access to technology

* Access to markets

* Minimum labour costs

The countries Elecdyne is taking into consideration to internationalize to are: China, United Kingdom and Mexico. Elecdyne is a 20 year old Japanese electronics SME with 100 employees that is currently struggling in the Japanese electronics market. This company is considering internationalizing their business in order to better meet the needs of the company. The following report outlines where Elecdyne should internationalize to (part 1) as well as how they should internationalize (Part 2) and what products they should produce (Part 3) once they decide on the later options. Elecdyne will choose a country to internationalize to through the use of a combined SWOT and PEST analysis. The strengths and weaknesses portion of the SWOT analysis along with emails from the president, Matsumoto Toyo, spurred the genesis of the factors involved in choosing a country to internationalize to.

The most important factor Elecdyne needs to consider is cost minimization, which determines if there is cost reductions associated with internationalizing to a specific country. The next factor is access to technology and determines the likelihood of accessing technological expertise within a country. Elecdyne also needs to consider not only having access to new markets, but also the size of the markets being targeted. Additionally, political and economic risk factors are important due to the fact that Elecdyne cannot afford to take high risks. Political risk is the "risk of a change in political institutions stemming from a change in government control, social fabric, or other non-economic factor"; Economic risk is defined as "the potential for detrimental changes in fundamental economic policy goals (fiscal, monetary, international, or wealth distribution or creation) 1. Lastly, the culture-fit factor needs to be considered because it determines how much organizational conflict will be generated due to differences between the Japanese culture and the host culture. Culture-fit will be measured using Hofestede's cultural dimensions. In economics, internationalization has been viewed as a process of increasing involvement of enterprises in international markets, although there is no agreed definition of internationalization or international entrepreneurship.

The latest discussions have concluded that internationalisation is essentially an evolutionary process, although not necessarily an incremental or a progressive one (e.g. Jones & Coviello, 2005; Lamb & Liesch, 2002; Madsen & Servais, ...