Potential difficulties of starting a business in a transition economy and recommendations
One major challenge that the Fleet Sheet experienced was market uncertainty in a transition economy of the Czech Republic. It is difficult for start-ups in transition economies to understand the relevant market data, such as pricing based on reliable external sources. Businesses are unable to predict future outcomes and understand likely consequences on their investments. Therefore, they cannot make massive investments because of unpredictable future outcomes (Alexandrova, 2004).
A transition economy also presents certain levels of market hostility, which entail infringement on property rights, competition and unknown consumer behaviors among others. These are major multifaceted threats to the company. Therefore, a transition economy depicts specific market unpredictability, threats and lack of control over market forces and changes, including government regulations.
The Fleet Sheet experienced market dynamics due to unpredictable changes and perceived instability. For instance, the Fleet Sheet could not effectively determine pricing strategy, the potential growth, the demand and nationality of its subscribers among others.
As the case of the Fleet Sheet indicates, it is recommended that companies, which operate in transition economies must maintain certain levels of innovation. This was clearly in the marketing strategy and adoption of the Internet by the company. Companies or entrepreneurs should depict business autonomy, including personal involvement and control as Erik Best had done. The company also survived competition because of competitive aggressiveness in quality services, risk taking and being proactive.
A SWOT Analysis of the Fleet Sheet, key success factors and areas of concerns
A SWOT Analysis
Strength
- Innovation in using technology for competitive advantage
- Effective pricing strategy for both large and small companies
- Low capital required
- Leader in the market
- Strong customer focus
Weakness
- A lack of organizational prior planning and company structure
- Inability to understand market dynamics fast and change as appropriate
- Inability to reach mass market with the fax
Opportunities
- Potential advertisement market
- Leverage technologies for competitive advantage
- The growing revenues and subscriber base
Threats
- Unpredictable government regulatory requirements
- Copyright infringement
- Unpredictable costs
- Competition and decline in subscribers
- Inability to use the Internet effectively
- Market uncertainties and world economic changes affecting multinational
Key successor factors and areas of concern
- The Fleet Sheet should focus on the Internet and technologies to create competitive advantage in the market. In addition, the Fleet Sheet must focus on growing its potential advertisement business as a means of diversifying products and services and capturing a large consumer base. In addition, the Fleet Sheet must focus on effective pricing strategy, a favorable business structure, and aggressive marketing campaigns.
- Erik Best must forecast possible impacts of the Internet on the business. Moreover, many multinational firms and German banks’ activities could have negative impacts on the company’s financial performance. The company must also review its competitors’ activities and develop strategic approaches to the market.
- Overall, Erik Best must develop a long-term plan for the company.
Three recommended strategic moves and possible difficulties in the international market
Technology licensing
Erik Best can negotiate with other distributors and companies to sale the Fleet Sheet services at a given fee under technology licensing strategy. This could be a viable option for the company in both domestic and international market. However, the Fleet Sheet will lose control over its technology, intellectual property and could provide poor services due to unregulated qualities.
E-commerce
The Fleet Sheet should consider e-commerce strategy to develop and change business relationships. This will allow the company to improve the quality of its “products, enhance delivery of services and cut costs of operations” (Ohmae, 1999). Erik will focus on B2B, B2C and intra-business activities. However, E-commerce may be effective in the Czech Republic where the Fleet Sheet targets local people with news and advertisement. In the global market, Erik must develop specific products for various geographical markets. Moreover, there could b high costs associated with foreign regulatory requirements, the Internet availability and qualified employees to facilitate service provision could be difficult to get.
Joint venture
The company has developed rapidly. Therefore, Erik may consider a joint venture to increase the presence of the Fleet Sheet in other locations. This strategy enhances market entry and possible later acquisitions. However, the company will incur expensive costs related to tariffs and costs of operations in foreign markets. It may also be difficult to coordinate operations because of differences in time zones. There are also ownership structures in different markets, which it must adhere to, and this means Erik could lose control over the company (Ohmae, 1999).
Benefits international entrepreneurship brings to multinational companies
Erik Best was an international entrepreneur who adopted technology to provide better services to its customers in the Czech Republic. Technology development in transition economies normally originate from skilled international entrepreneurs who use them for efficiency (Foley, 1999).
From the use of technology to provide information, Erik brought about efficiency for its customers who were interested in getting relevant information fast. The Fleet Sheet used modern technologies to reduce costs and focus on mass coverage. Moreover, the company demonstrates effectiveness of improved marketing skills.
Erik notes that the Fleet Sheet survived the competition because of its quality services. The company developed a service that could appeal to professions from various parts of the world in the Czech Republic. Such services help in developing qualities of local products.
Finally, there is also an element of international cooperation. Erik notes that he must inform the US Government of his actions in the Czech Republic. Such activities enhance closer ties and cooperation between countries.
References
Alexandrova, M. (2004). Entrepreneurship in a Transition Economy: The Impact of Environment on Entrepreneurial Orientation. Problems and Perspectives in Management, 2, 140-148.
Foley, J. F. (1999). The Global Entrepreneur: Taking Your Business International. Chicago: Dearborn Trade.
Ohmae, K. (1999). The Borderless World: Power and Strategy in the Interlinked Economy. New York: HarperCollins Publishers.