Report on the feasibility of the overseas expansion of acomb tyres in Essay

Report on the feasibility of the overseas expansion of acomb tyres in india - Essay Example The best beneficiaries in this case would rightly be India & China, with Russia just beginning to emerge to becoming a challenger to them in this are. The world has seen similar advances in other domains of trade & commerce as well. Companies today feel pride in declaring themselves as multinational corporations rather than be known more as local or regional players. The tyre industry is one such area, which has seen similar changes. Today major tyre industries like Bridgestone & Dunlop are popular & financially very strong owing to the fact that they are MNCs (Multi National Corporations). But, Yadong Luo (1997) is of the positive view that this must not deter other SMEs (Small & Medium Enterprises) from aspiring to go global as has been cited by Zoltan J Acks (2001). This report is written as an advisory statement to the Acomb Tyres of the UK (which is an SME) as to what are the pros & cons of setting up shop in other countries. In this report, the country under discussion is India. The reasons for selecting this country as the most favorable destination is discussed in the following sections of the report. As the Acomb tyre Industries' major area of production is in the area of agricultural tractor tyres, the report concentrates on analyzing a suitable market for the same type of products. The present section concentrates on what are the reasons for global expansion as also what are the best strategies to initiate such expansions. Examples in support of the argument are discussed in the section that deals with the expansion of Acomb in India. REASONS FOR OVERSEAS EXPANSION & STRATEGIES TO DO SO There is no doubt that Acomb Tyre Industries is established & considerably popular in its native market in the UK with an estimated annual turnover of around 22m. But the following points that are described below outline the prime reasons as to why Acomb should consider a major overseas expansion: Limited Home Market It is a known fact that Acomb industries has won several awards for its unique and innovative products and has earned a solid reputation among farmers and other users of agricultural vehicles in the Northeast England and its surrounding regions. But a point to note is that the tyre market in the UK has been found to become stagnant in terms of growth & the economy. The tyre industry is no longer seen as a major contributor towards the development of the economy as it used to be so previously. Siobhan A Austen (1999) says that a prime reason for this can be attributed to the fact that the amount of sales of tyres on an annual basis; especially in the agricultural sector has reached its optimum levels owing to the limited amount of land available in the UK. Acomb has also been feeling the effect of the limited market, which is one of the company's prime reasons for asking us to prepare this report. The analysis of the prevailing market conditions in the UK have led us to the conclusion that it is time for Acomb to start looking for greener pastures. Better Profit Margins History has shown that today's major companies have come to dominate the market,