Foreign Market Entry and Diversification

Diversification will be the main strategy for longevity of the Pink Lotus Innovations (LLC) Company. Diversification is a significant strategy in the company operating in the international market because it will enable the company to increase revenues. This is through higher sales volume made from diversified products and services in the new market. Therefore, the company will diversify their business in order to reduce risks in the new markets; thus maximizing returns through investing in diverse areas. The aim of diversifying the business is to increase the stock prices and reduce the risks, which may arise in the new market; thus achieving effective business competitive advantage.

The strategy for business diversification will be expanding the operation of the company through adding new markets, new products and services of different types and adding production stages to the existing business. The catalyst for achieving these strategies is taking into consideration the mission and vision f the business; thus grasping the opportunities when presented in order to move toward profitable business. The aim of this diversification strategy is to allow the business to enter business lines, which are dissimilar from the presented business operations. Some entrepreneurs believes that diversification is achievable through a natural advancement that is extending the new brands by offering customers a variety of products; thus meeting their demanding needs (Tielmann, 2010). However, an effective diversification strategy is capitalizing the core competence of the company and the strengths of flourishing brands to enable the business perform successfully into the new markets.
The synergies may be gained from the diversified activity through incorporating the corporate level strategic decisions together with the diversified activity. Onkvisit and Shaw (2009) argue that companies nowadays strive in order to survive in the face of economic competition in the international market. Therefore, synergies for brand diversification strategy have become one of the common diversification strategies for entering into new markets in order to compete favorably with the competitors in the competitive global market. Therefore, the company can achieve synergy from diversified activity through creating more value to diversified products.  The corporate can also enter into the diversified areas where corporation key resources and capabilities can be shared and leveraged in order to improve organizational performance. The synergies can come from both horizontal and vertical relationships from varied business units. The company can take into considerations the core competencies by leveraging competencies and shared activities in order to fuel the new business growth.

Before the LLC Company enters into the foreign market, they should first analyze the environmental conditions of the foreign markets. They can employ effective models for analyzing the country’s attractiveness and the competitive strength of the business. Therefore, the foreign markets where the LLC Company can enter is the overseas markets such as the European markets. The company will employ effective strategies for entering the oversea markets in order to enable them become competitive; hence increasing profitability. One of the effective strategies that the company will employ is indirect export strategy. The company can use this strategy for matching the requirements of the foreign buyer. It can also choose to deal with international business that takes into considerations the foreign policies and regulations. The second strategy is the direct export since analyzing the direct export activities will enable the company to take greater control of their activities. It can involve in product sales and distribution in the international markets; thus employing this strategy will enable them to increase their sales. Lastly, it can employ foreign production strategy, which is an expensive strategy, but the most significant strategy for the companies entering oversea markets.  This strategy can enable the company to reduce the price for products; thus competing effectively with similar local products and services in the foreign markets.

One of the challenges that LLC Company will face in the foreign market is high competition from companies producing similar and high quality products. Lymbersky (2008) argues that many companies face tough competition in the global market because of increased technological advancement. Technology advancement has enabled companies to produce innovative products and use e-marketing strategies for achieving competitive advantage. Therefore, LLC Company can overcome competitive challenge in the global market by utilizing e-marketing strategy such as the use of social media services or Internet to reveal to customers the quality of services they offer to customers. They can also design high quality and valuable brands of different types that will satisfy the needs of customers; hence increasing profitability level. Other challenges may include cultural nuance, communication style, brand name diluting issues, social or ethical issues identification of true market demands, , and distance or time challenges. However, the company can respond to these challenges through employing effective communication strategies, understanding the cultural aspects of customers in the new markets, creating a stable brand loyalty and carrying out further marketing research in order to identify the target market effectively. 

The company can diversify or expand their business into the new markets when the business environment continues to change. The company can also start diversifying when it has started growing and performing better in the local market. Therefore, diversifying their products will enable them to increase sales and incomes; thus maximizing profits in the new markets. Moving into the new market well occupied by stiff competitors often makes sense since the market is familiar; thus offering the company the need to market their products and services better value. Market diversification has varied challenges such as high risks and costs of entering into the new markets, as well as, cultural differences and competitive issues may impact the organizational performance. Thus, it is crucial for the company to implement diversification strategy in order to improve the quality and value of products; thus achieving a competitive advantage in the new market.

The company can create a business environment conducive to ethical behavior in varied ways. First, human resource managers can maintain ethical integrity with labor force through effective employee interactions. This is through taking accountability and managing employ related issues in the work place effectively. Neelankavil and Rai (2009) argue that maintaining ethical integrity in the work place is vital because it will enable the company to overcome problems arising in the business operations. Secondly, ethical integrity also pertains to effective interaction or relations with customers. Being honest about the product features that can offer effective satisfaction to customers is one way of creating conducive business environment. Service providers in the company should act with integrity through keeping promises to any appointment and quality of services offered to customers. This is essential because it will contribute to success business performance; hence enabling the company to achieve high profitability.