Market Expansion at CMS Electronic Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Market Expansion at CMS Electronic Case Solution

Introduction

This case sheds light on CMS electronics headquartered in Klagenfurt, engaged in manufacturing and distribution of the electronic product of different companies that had utilized the company for outsourcing. The company provides manufacturing and engineering services to an electronic company based in Australian, which is currently engaged and operating in Europe. The crisis took place in the European electronic industry because of overcapacity in the industry as well as the excessive production of mobile phones and consumer electronics. However, the Australian company is considering expanding to Asia (China) and is also negotiating with CMS electronics to provide engineering services to the Australian company potentially operating in China. On the other hand,the corporation would outsource its manufacturing function to some local service provider in China. For CMS electronics engineers, this deal is unacceptable as the senior management believes that this strategy taken by Australian company would potentially decrease the product’s quality and efficiency due to the lack of competent professionals in the region. The main reason for the clients’ unwillingness to employ its manufacturing function would attribute to the fact that the company does not have its production facility. Hence, the company's management was faced with the challenge of deciding whether the company should invest to set up a local manufacturing facility in a new market or not. The management also needed to assess the risk involved with this investment. They needed to determine the opportunity cost of the potential acquisition of new production unit and the possible losses of customer. In addition, the company would suffer if it does not acquire the production customers.

Globalization process of CMS

The company inan attempt to increase its sales and market share expanded its manufacturing units as well as its sales distribution department to enhance its business development function. The company was based in Klagenfurt, Australia with one manufacturing unit in Australia and and another production unit on a joint venture agreement with an existing partner operating in Hungary to take benefit of the cheap labor and its already adequately formulated infrastructure of the company to produce the product cost effectively to enhance the company's profit margins. Furthermore, the company also set up its trading offices in Kassel, Germany and another in Corlu, Turkey and Hong Kong, China. It propelled and enhanced its business development activities and to provide potential benefit to the company in the form of increased reputation and growing its sale revenues along with increasing the brand awareness and brand recognition of the enterprise in a different market so that it could increase its market share while enhancing its profitability.(Ch, 2011)

Driving Forces behind globalization

The competitiveness of the industries and corporation had increased similalrly. Moreover, the level of the competitors’ competitiveness had also increased resulting in a highly advanced strategic formulation and implementation to gain a competitive advantage over the competition to increase their sales margins and reputation in the market. In today's market, every company is trying to get a competitive edge in an attempt to increase their sale revenues and market share. Some companies also consider expanding into different markets outside their region to increase their chances of effective and efficiently gaining higher sales margins. Where the enterprise develops businesses abroad, then this could be referred to as globalization. Globalization is an important factor for any business to expand or increase its profitability ratios by engaging and exploiting the market segregation and segmentation of the highly diverse and potentially beneficial market of different countries. However, the company is considering expanding into the various and competitive market therefore, China would be faced with three factors, which would generate income and assess the success of the company in the new market are listed below (Experience)..................

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