Home Essentials Case Study Help
The Location Choice Decisions
A detailed market entry analysis has been performed on the basis of past experiences of business in different countries, with an inclusion of the reference to thecurrent prevailing norms of the industry, in order to examine the new locations for thebusiness in different countries.
The analysisrepresentsa number of factors, on which the decision has been made. Number of factors which have been considered, include: an ease of market entry options, assessment of competition, size of the market, average wage cost, tax rate, capitalrequirements, purchasing power, political stability, corruption index and an ease in the termination of employees. All the aforementioned factors have been evaluated and weighed, in order to analyze a perfect location for a new business.
In the appendix 1, the ranking and the respective value have been calculated for each potential location. The ranking has been made according to the related value. The higher the value is, the highest the ranking has been given. The criteria have been weighed according to the data provided, related to the aforementioned factors. In addition to this, the values has been assigned numeric values on the basis of 10 for the best one and 1 for the worst one.
In the appendix 2; final suggestions have been made by adding the student criteria for calculation. In this, the potential success factors for each country, which were previously held by the company have been examined. The same weighing criteria has been set for this calculation. Thus, it is recommended that with the help of proper scoring and weighing, Dublin should be considered at the first priority as the best location to enter, because itis scored at 10th. While, at the second most potential location, Hong Kong should be considered because it has been given with the 9th rank.
Exline mistakes
Initially, Exline had failed to recognize the value of cultural differences. “One of his Hong Kong employee refused to accept the recognition award alone”. The cultural norms were different in Hong Kong, which worked well in the form of equality between employees. Thus, at last, Exline succeeded to maintain a healthy relationship with his Hong Kong’s employees by providing them equal growing opportunities along with a developing sense of ownership.
An arrogance and lack of market research forced the company to close a number of its outlets in different countries. In addition to this, the company was unable to adopt an effective employee retainingpolicy, making many employees quit their jobs after serving for ten years, , which affected the organization badly. Furthermore, Exile had made a number of mistakes,which were the result of his overconfidence on his gut instincts. Exile approached a number of countries without having a complete priorresearch work. For example, in Pakistan, the need for rental furniture, especially for expatriates, were low.
Another major mistake made by Exline was winding Hong Kong business over salespersons. His employees were shifting and approaching to establish their own business by targeting Home Essential’sclients. Another major mistake was relying on the company’s own cash flows for further investment, and not saving the amounts for unforeseen situations. Along with this, mismanagement in financial dealings led towards delayed payments. These all factors contributed to thecash reservesdepletion and liquidity problems.
All these mistakes enabled him to review his entire business by having his major focus onhis company’s main competency- furniture rental business. He analyzed that the demographicsand consumers preferences had changed with the passage of time, and he has to concentrate on these changing demographics, from families to youngsters.
Recommendations
It is recommended to Exile that he should avoid trusting his gut instincts, because business is full of risks and isentirely dependent upon the customer and external environmental factors. Thus, the owner should have a proper research work before entering into a new market, and must analyze the current customer demands.The selection of new store should be based after going through an extensive market research, by targeting the market with the previous success factors. Every country’s customer choices are different, their norms and cultural values are different. Thus, it is recommended that the company should focus on these factors as well.The continuous improvement model along with kaizen approach has been recommended for Exline. In addition to this, the management should consider the personnel norms and values, and should acknowledge that a worker would be more committed, if his values have been acknowledged. All the countries’ business should be linked together and could be assessed by each country’s management at any time. It is recommended that the company should design such an operating system, which would provide a link to all business and should provide an experienced knowledge to all, whenever the top management gets stuckinto an unfavorable situation.(See appendix 3)
Conclusion
Home Essentials was found by Christopher Exline in 1997 in Singapore. The companyprovided furniture rental services to the expatriates. After the end of financial crisis of 2008, Christopher Exline was worried about the potential challenges, which were related to the reduced liquidity position, Oman- over expansion, Hong Kong- loss of focus, Dubai- restructuring, lack of credit line and slow growth. Exline was considering the steps which he could take to improve the long term sustainable growth, along with analyzing the potential global ventures. It is recommended to Exile that he should avoid on trusting his gut instincts, because business is full of risks, which entirely dependon the customer and external environmental factors. The selection of new store should be based after going through an extensive market research, by targeting this market with the previous success factors.................................
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