Geo Tech Case Solution
Introduction
Thomas Boyatt is the founder of the Geo Tech Company, which was a system services company. The company provided services to owners who wanted to monitor the natural resources that were being harvested.The company became a quick success and launched a number of products to expand its services to diverse number of customers. However,the company faced some issues regarding its sustainability as competition entered the market; other companies were selling products that were similar to Geo Tech’s products in the international market. To remain sustainable and compete in the market with other producers, the company started geographical expanding and searched for markets which were not yet claimed. The management targeted the Canadian market which they believed to have sufficient potential and growth. Also the Canadian market was expected to make use of these types of technologies in near future.
Therefore, in order to fulfill the growing demand of Canada, the company planned to start a project in Canada where the company would attract potential customers, although no production plant was planned to be set up at Canada and only minimum expenses were incurred.The company would offer 3 years contract to its customers and charge license fee annually and once at beginning of contract a set-up fee. The management planned that the project would continue for five years and afterwards the customers would be asked to renew their contracts with the company at the office at the US.
Geo Tech
Geo systems Technology Group (GEO Tech) was founded in 2002 to provide system services to customers regarding geographic information systems. The company aimed timberland market and provided data analytics software that allowed the customers to monitor the natural resources and assess the provided data in many different ways. It allowed its users to prepare forecast based on the management’s strategies regarding the resources. The products also allowed users to store information regarding their contracts and providing results for the user. The software tells the user regarding the quality of timber using sophisticated techniques.
The company provided three types of services which were sold in form of contracts to clients. The service contracts are following;
Tracker- it helps to track the consumption of timber
Foresight - it was very sophisticated software that provide a range of services
Oasis - advanced software that allowed development of complex models and automated the desired tasks.
Problem Statement
The company needs to expand its operation in order to stay sustainable in the market for long term.Geo Tech Company’s management has,therefore,decided to acquire the Canadian market and sell its system services and products.To start operations in Canada, the company needs to make some investment. The management needs to decide whether to expand the operationsto Canada or to search for any other markets. The project will be acceptable ifit produces positive cash flows.
The management also needs to consider the risks that the company will face due to movements in the foreign exchanges of USD to CAD.
Decision to Enter Canadian Market
The main decision for entering the Canadian market was based on a strategy to reduce the increasing competition in the market by placing barriers to entry in the market. The company could not expand its operation while operating its data center in the US only because of the policies of US government regarding the access to information;therefore Canadian clients did not pursue US companies for data management.The company believed that the companies would not consider this matter for a long period of time and after some time they would continue with the US companies. Therefore,the Canadian setup was a temporary action and the management planned to later bring those clients to US......................
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