The modern company tends to see it as the height of success if they are already within the international field battling with other multinational organisations. Though this might be true to some extent, the decision to operate in the international level tends to be rather vexing. The more possibilities on which a company acquires in the market, there also lays a consequent and incontrovertible truth that added problems and even more complex ones will come into view. Thus, expanding the operations in an international scale is not a matter to be taken lightly. The following discussions will be focusing on the decision of Odysseus Inc to expand internationally and consider its case to verify the exact path that could complement their operations.
II. Expansion to International Business OperationsIt is a generally accepted knowledge that operating in an international level is incessantly advantageous for the performance of a firm. The ability of a firm to contend with the demands of the foreign market and to satisfy the strain of international business seems to provide a sense of accomplishment for the company. (2005) So to answer the question whether Odysseus should take on actions towards internationalisation, then the answer is that they should do so. However they must realise the subsequent demands on which the international market asks for companies operating in this level. Contractor, (2003) manifested that the decision to go international for most companies do exhibit a “diminution of performance.” However, this does not imply that companies will suffer. Companies like Odysseus will be encountering rough and even violent challenges in the initial stages of its operations before it calms down and allow them to reap its benefits. Thus, for Odysseus, they should first realise that the initial troubles that they could encounter are merely based on the barriers of internalisation. In the same regard, Contractor, (2003) have observed that there is an emerging trend among companies expanding internationally that their performance becomes overly affected once they have gone beyond the optimal level of expansion. This only means that companies cannot go over the top with their internationalisation initiatives unless they have made efforts to deal with these elements that could hinder growth or even the cause of their demise.
Despite these perceived challenges, the established belief that going international is beneficial for any firm is not without basis. It has been noted that going international could mean the “spreading common and central overheads” with more nations. (1991, 2003) This means that the fixed costs on which the company could accrue is spread throughout the rest if the nations it intends to operate. This is exactly what Odysseus needs as they rely heavily on research and development. With their expansion in the European sector, they could acquire the knowledge they needed in improving their couplings and stay on top of that niche. As said in the case study the technology was indeed developed in Europe which indicates that the basic principles and potential developments of the process are seen to be possible in the same setting. However, that only focuses on the needed knowledge and product development of the firm based on R&D. International operations also entails benefits in labour and resources as the company could acquire cheaper labour in its manufacture of couplings. (1990, 2003)
III. International Operations and ActivitiesBased on the case study, Odysseus is considering a joint venture with Scylla, acquiring Charybdis and the possibility of continuing the licensing with Siren. There is no reason why the company could not do these three. In having a joint venture with Scylla, the company will have a base in Europe. However, there are some considerable drawbacks as majority of the studies written about joint venture has not explicitly calculated the context of split control joint ventures. (2004, 201) This means that Odysseus’ control over the operations in the joint venture would be rather restricted. However, this also means that the costs will also cease from being stretched.
On the other hand, continued relationship with Siren is imperative as they are among the top earners of the company. However, the case study also indicated that Odysseus owns the niche and possibly have the monopoly over the flexible couplings. At this point, it must be recognised that Siren does have a need for the products of the company which gives Odysseus ascendancy to some extent. If they end their business relationship, both companies will suffer. This will be further studied on the subsequent parts.
However, they must first consider the acquisition of Charybdis before talking on any other international expansion initiatives. In doing so, the company is establishing a headquarters in Europe. In the same account, acquiring Charybdis essentially gives them willing skilled labour and management level employees. Moreover, as indicated in the earlier discussion, it is anticipated that the initial stages of the international expansion initiatives will be incommodious for the company. Thus, they must focus on one endeavour first and take on other opportunities once their condition has stabilised. Once they have a firm grip on the European market, then they could further expand their operations in the region.
IV. Examination of the Siren ArrangementThe Siren agreement presents a dilemma, though there doubt on it having major implications on the Odysseus, for the company. The following will dissect and analyse the elements of the arrangement.
A. Assumptions of OdysseusBased on the case study, there are some reservations on the part of the company regarding the relationship with Siren. For one, Odysseus tends to place value on the relationship as the sole entry for the company in the European market. The relationship with Siren has established that there is indeed a demand for the products of Odysseus and it is a huge demand at that. Odysseus failed to realise that in as much as they are dependent on Siren in their acquisition of added profit, so does Siren as Odysseus have control and patent on the product. Thus, it shows that Siren also needs the licence that Odysseus bestows them and as well is not in the position to make demands on what markets are off-limits and what markets are not. There is always the possibility of licences ending and a much bigger possibility of it not renewing for Siren if Odysseus realise their standing in the market and how Siren is in a sense bullying them.
B. Level of SuccessThe question on whether one could consider such conditions successful internationalisation, particularly on the licensing initiatives of the company with Siren, is still doubtful. To view their arrangement with Siren, there was limited control with regards to the marketing of their product. At some point, one must realise that, for a company so powerful Odysseus, sacrificing control would rather limit their potential seeing as they do have a considerable demand for their product. In the same regard, their company have a reputation of having higher delivery time, high quality, great service and excellent merchandising. With their brand having such a reputation, having added control on how to market these products will be the height of success for the company.
C. Importance of TimingTiming is indeed important in this context. The arrangement between the company and Siren has given the former the proper introduction to the European market. If Odysseus does want to take on the international market, the rest of Europe in particular, controls on the distribution and marketing should be on their hands. Though it is a given fact that their brand has been made strong in the European market, Odysseus should continue to consider Siren as a business partner in the region.
V. Scylla S.A. Proposal and Charybdis PossibilityScylla SA and Charybdis also bestow Odysseus with the possibility of internationalisation and expansion of their operations. Scylla offers the company an opportunity for a joint venture thus establishing a base France. On the other hand, Charybdis gives the company the option to buy them and as through being a subsidiary based in Germany. Again, the only difference between the two is the level of control that Odysseus will have once the arrangement is completed. In the case of Scylla, the leadership of the Odysseus will still have control of the minority of the company. This means that the overall direction of their international expansion still rests on what the Scylla part of the management decides. On the other hand, the Charybdis initiative practically gives Odysseus a plant as well as a skilled team to operate their business in Germany, a market among which are in the top of Odysseus’ priorities.
At this point, the offer of Charybdis appears to be more appealing than that provided by Scylla. It is thus recommended by this paper that the company take on the offer of Charybdis given that they could minimise the costs upon merging with the said company. ( 1992) At some point the company must anticipate the inevitable U-curve indicated in the discussions above once internationalisation initiatives took place. At this context, Odysseus is in control of the overall company given that they are the dominant culture. In acquiring the company, they have an existing workforce, a plant, and even an existing market share which could similarly boost with the inclusion of their brand in the German market. (2001)
VI. Proposed Global Strategic PlanThe following part establishes the possible courses of action on which Odysseus could take. The following are based on the discussions above regarding the internationalisation initiatives of the company with regards to their operations.
Engage in merger and acquisition initiatives with Charybdis
Control over the operations of Odysseus is of utmost priority so as to allow the company to manage its costs well. Given the rather rough road ahead in the initial parts of the internationalisation initiatives, control is thus indispensable. However, upon acquisition of Charybdis, Odysseus should take on training activities as soon as possible to the workforce to make the transfer of knowledge and transition of the culture would be rather smooth. (2003)
Negotiate licensing with Siren
As established above, the relationship with Siren is more profound as it was the first step on which Odysseus engaged in international endeavours. In keeping Siren as a distributor and a holder of the Odysseus patent licence, it gives the company great reputation in the rest of the European sector. Moreover, this could open the door for larger networks in the region.
Negotiate with Scylla with the possible M&A with Odysseus
The proposal of Scylla is rather lopsided with preference on their interest. Odysseus should make a counter-offer to buy Scylla entirely. However, they have to realise that this negotiation should be done the moment their M&A initiatives with Charybdis has stabilised.
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