Foreign Market Entry and Diversification

Foreign Market Entry and Diversification

Introduction

Nest Ltd. is operating in the food sector of the US economy. They provide different kinds of dairy products in major cities of US. The company has been able to reach at a maturity position but in order to avoid the decline in their business they need to design and adopt new strategies. Currently the dairy sector of the US economy has become saturated and there is no progress in the businesses of the major firms involved in this sector. Nest Ltd. had to face a lot of competition from domestic and international firms like Nestle, Kraft and others. Therefore in order to achieve further growth and expansion Nest ltd. need to diversify their investments and search for new markets to successfully enforce the diversification strategies. Thus further report will highlight some of the diversification strategies that will enable the firm to expand their business in the local and foreign markets.

Discussion

Nest ltd. has many opportunities that can be utilized in order to bring a new life to their business and maintain sustainability in their business. Nest ltd. only operates in the dairy products whereas their competitors have been able to generate profits from operating their businesses in other sectors of the economy. Competitors of Nest Ltd. like Nestle, Kraft and etc. has increased their variety of products and today they are selling more than 100 different kinds of products like chocolates, coffee, noodles, ready to eat food and many other. Thus it is important that Nest Ltd. instead of investing all the money in one basket, they should increase the number of baskets so that if one falls other baskets can cover up their loss. Nest Ltd. needs to invest in increasing the number of their product line that can operate in different sectors of the economy. This will reduce their risk of failure of products but instead will help the firm in increasing their profitability.

The most successful strategy for the companies in recent times is to diversify. Diversification helps the firm in expanding the businesses, locate new markets for the existing products and it also enables the firm in providing new products in the existing markets. Nest ltd. can also diversify their business through synergies like mergers or acquisitions which will provide several benefits to the company. Synergies will enable the firm in benefiting in two different ways: firstly it will benefit the firm related to its operational activities. According to Reyken (2012) through sharing resources it will enable the firm in distribution of facilities in new markets, it will help the firm in transferring their brand name in the overseas markets and the most important advantage of synergies will be that it will help the firm in conducting joint research and development. Investment in research and development is the most important element in the success of the business.

The second advantage Nest Ltd. would gain as a result of creating synergies will be related to the strategic ...