Introduction: Flexshopper LLC
Flexshopper LLC is a financial and technology corporation that offers durable products and goods to customers on a lease-to-own basis. Flexshopper stores have performed relatively well in terms of profitability and ability to capture the market in the United States of America, owing to the success of the model strategy applied. Although it is established as a rental company, Flexshopper’s strategy emphasizes ownership of the products sold. In fact, the idea of focusing more on facilitating the ownership of the products is the unique factor of Flexshopper stores. This differential empowers the company against its competitors, giving it a competitive edge. More than half of the consumers end up owning the products after renting them, which is a higher proportion compared to the traditional rental companies. Furthermore, the model is highly profitable considering that Flexshopper offers short-term rentals. As such, the monthly installments are significantly higher than the payments made in long-term arrangements that run over five years or more. Therefore, the overall cost of the product rises by a range of sixty to ninety percent (Chu, 2011). Finally, the store also provides free shipment and repairs for the clients. These features are highly valued and attract a host of customers to the company.
Suitability of plans to pursue a global strategy and expansion into Mexico
The main reason is that there a great risk of incurring massive losses owing to the risk of failure to meet the market needs of the people in Mexico. The products circulating the U.S market might not fit the needs of the people in Mexico. There is also the risk of different consumer patterns. While there is opportunity in the knowledge that there is no competition in Mexico, it also comes as a big risk. The implication of having no competition is that there is no background for research of the market suitability to the introduction of the rent-to-own industry (Chu, 2011). At the moment, the company needs to stall the expansion plans in favor of growth in the home country, especially considering that it is doing well domestically. The short-term costs of pursuing this local expansion are lower compared to the costs that will be incurred in a global expansion because the company has already mastered the market. In any case, future investment in Mexico would be a wise choice if proper and comprehensive research is conducted. In spite of the lack of competition posing the big problem for the company, it is also its biggest pointer of opportunity.
Mode of entry
The company needs to strengthen its marketing to propagate the message that it serves to give the people without credit a chance to own property, preserves credit, and adjusts to the cash flow of the target market. Besides, the company must adapt the strategy to the consumer habits of the new market to prevent failures (Linton, 2018). Specific consideration is to be paid to the government regulations for compliance.
Resources and capabilities needed to facilitate global expansion
The creation and sustenance of a successful global strategy should focus on giving the company a competitive advantage. Flexshopper requires a systematic approach that facilitates the exploitation, renewal, and enhancement of the core competencies of the company (Lessard, Lucea & Vives, 2013). Notably, its core competencies in the rental industry lie in its uniqueness. The uniqueness is attributed to its emphasis on ownership of property, free shipment, and free repairs. Additionally, the fact that it targets the individuals that lack credit gives it a competitive advantage as it captures a large section of the market. The company needs to focus on these home-based core competencies when researching to become new entrants in the foreign markets as these are the same factors that helped drive local success (Lin & Chang, 2017). By researching the new market with respect to these factors, the company comes across important information that informs its differential strategy in the new market. In most cases, the companies need to change the organizational culture to suit the legal framework of the new market as well as the specific consumer needs.
The best course of action for Flexshopper LLC
The best course of action, in the long run, is expanding to Mexico. While it may not be a viable option in the current situation, especially after the failure in Puerto Rico, it is still important to pursue this as an option in the future. The main reason for this move to expand into Mexico is the fact that there is no competition. This drastically reduces the cost of entry into the industry. It also implies that Flexshopper will be a product pioneer, which gives it the power to control the course of the industry in Mexico. Furthermore, with the imminent saturation of the U.S market, companies will seek to expand into the adjacent markets to ensure profitability. It is important for Flexshopper to be a step ahead of the rest of the companies to maintain a competitive advantage. However, caution must be taken to ensure that the company conducts comprehensive research prior to pursuing this expansion.
Cultural differences, Cultural exchange, and Distribution Methods: Flexshopper LLC
Every organization wants to expand its business in different regions. However, culture is the big factor, which creates an impact on the decision-making and strategic planning process. Flexshopper LLC, a subsidiary of Flexshopper Inc, is offering different durable goods to customers on a lease-to-own basis. It offers the products to third-party retailers through its website. The business in Mexico is quite challenging, and through appropriate cultural and distribution considerations, the company can make a difference in the market.
Cultural Difference: Flexshopper LLC
Indulgence vs. Restraint (Indulgence)
The definite tendency towards indulgence is quite visible in Mexico. People like to have weak control over desires and try to enjoy life with a lot of fun. Comparatively, in the United States, people have restraint power, and it seems a big difference (Hofstede-Insights, 2018).
Individual Orientation versus Group Orientation (Individualism)
The Mexican culture demonstrates the collectivist society. People usually take responsibility for different fellow members or groups. On the other hand, the United States depicts individualism, as several actions are to be taken for personal benefits or interests (Jukka, Andreeva, Blomqvist, & Puumalainen, 2017).
Achievement Orientation versus Quality-of-Life Orientation (Achievement)
Quality of life and caring for others is comparatively lower than in the United States. The Mexican culture is the depiction of achievement orientation as compared to the U.S. culture.
Need for Certainty versus Tolerance for Ambiguity (Certainty)
It is a fact that Mexican people like to avoid uncertainty and try to sustain actions. Comparatively, this culture is intolerant of unorthodox ideas and thoughts.
Hierarchical Orientation versus Participative Orientation (Power Distance)
The Mexican culture is in the limelight due to its Hierarchical Orientation. For Instance, people like to work under people, and all decisions are to be made at the top level. Comparatively, the United States contains participative decision-making, which depicts the democratic approach (World Business Culture, 2018).
Long-term Orientation versus Short-Term Orientation (Time Orientation)
People in Mexico usually try to respect different social norms. It seems the normative society. The normative approach can be seen in their thinking. People want to get quick results.
Cultural exchange
Relative to these differences between the United States and Mexico, there are some cultural aspects, which can be exchanged. For Instance, short-term orientation can be exchanged by this company, and several products or services can launch immediately to experience general acceptance. Furthermore, instead of the individual, the company can integrate with the collectivism as products are to be offered for families or groups in this region (Jukka, Andreeva, Blomqvist, & Puumalainen, 2017).
Distribution Methods: Flexshopper LLC
Product/Market
The intention of this company in Mexico is to develop an immense range of products for customers to streamline the customer preferences. Building an effective product portfolio is a good approach, which can enable effective distribution.
Pricing
Penetration pricing strategy will be used, as the intention is to come up with low prices. The low price of products will increase demand in different areas, and accordingly, the distribution can be tackled (Jukka, Andreeva, Blomqvist, & Puumalainen, 2017).
Positioning
The company is looking to position itself better in the minds of customers by containing high quality at low prices. It seems a remarkable positioning approach, which can direct the distribution in this new region as well.
Cultural differences and exchange are top considerations for any organization when entering the new market. Based on these cultural differences and exchanges, the management of the company can make some effective strategies to gain and sustain success. Mexico, business sustainability is possible for Flexshopper LLC if it integrates with the culture effectively. The business sustainability is quite triggered by distribution well.
Business expansion opportunities for Flexshopper LLC are in the limelight. However, the company management has to shape its internal and external business environment to make a successful entry into Mexico. Several insights regarding the internal environment, external environment, strengths, business problems, and cost are to be considered by this company to come up with some workable strategies.
Internal environment of Flexshopper LLC
Flexshopper LLC contains an effective employee mix, which depicts the employee-oriented corporate culture. For Instance, Pay for performance and Employee happiness are two important aspects, which make the internal process quite directive. Management has to implement the autocratic approach to deal with people. The company can utilize its financial resources and create the capability to make some changes with the passage of time (Hamilton & Webster, 2015).
External environment for Flexshopper LLC
The external business environment integrates with customers, suppliers, competitors, and different public pressure groups. For Instance, the company has considered customers as stakeholders of the business, and the intention is to enable the attractive offerings to enhance the visibility of satisfaction. To retain the quality, consideration of the concentrated suppliers is a good option for this company in Mexico. Despite having the highest bargaining of suppliers, the quality of the material is not to be compromised. The competitors in the same industry are conducting the differentiation process. Product imitation can be a big issue in the external business environment, and the big solution for this company is the differentiation regarding cost, price, and quality (Brinkman, Navarro, & Harper, 2014).
Strengths of Flexshopper LLC
The companies can enter into this new market along with some key strengths. These strengths are to be utilized effectively. For Instance, the brand image is the biggest strength of the company. Due to the sustained brand image, it seems tough for customers to move and make other preferences. The financial condition of the company is good, which creates further opportunities regarding the business expansions in Mexico. It is a fact that the company can make a big difference in the market through a strong and comprehensive distribution network. Reaching the customers without any compaction is a prominent strength.
Problem Analysis for Flexshopper LLC
In the business process, the management of the company may face different issues or challenges, especially when conducting business in Mexico. As elaborated, the Mexican culture depicts high uncertainty avoidance. Accordingly, some immediate action plans are to be implemented to get rid of the problems. Identifying causes, working on different alternatives, and rational decision-making are some key elements or components, which are visible in the business problem analysis (Davide Castellani, Nguyen, Surdu, & Walker, 2018).
Recommendations and implementation costs
The biggest recommendation for this company in this new market is the change. The Mexican market is integrated with some new business or retail trends. Thus, this business has to evolve with time. Moreover, another recommendation is to contain the strategic alliance with the local business partner. It is beneficial for the business, as profit, cost, market share, and an immense range of customers can be shared immediately. Regarding cost, the company is looking to initiate activity-based costing to keep all operations efficient. In the competitive market, it is a pertinent approach.
Conclusion
In the end, it is to conclude that the internal and external business environment should be analyzed before making the entry. The new market entry needs any changes or amendments in the internal business process to integrate with some external elements. In this modern or contemporary business era, some improvisations are required in the business process. It ensures sustainability in the new market and makes all key stakeholders responsive.
References
Brinkman, J., Navarro, I., & Harper, D. (2014). Unlocking the Business Environment. Routledge.
Chu, M. (2011). Case Study: Play it Safe at Home or Take a Risk Abroad? Harvard Business Review. Retrieved 10 April 2018, from https://hbr.org/2011/10/case-study-play-it-safe-at-hom.html
Davide Castellani, R. N., Nguyen, Q. T., Surdu, I., & Walker, J. T. (2018). Contemporary Issues in International Business: Institutions, Strategy, and Performance. Springer.
Hamilton, L., & Webster, P. (2015). The International Business Environment. Oxford University Press.
Hofstede-Insights. (2018, January 1). Country Comparison. Retrieved from https://www.hofstede-insights.com/country-comparison/mexico,the-usa/
Jukka, M., Andreeva, T., Blomqvist, K.-M., & Puumalainen, K. (2017). A cross-cultural perspective on relational exchange. The Journal of Business & Industrial Marketing, 32(7), 937-950.
Lessard, D., Lucea, R., & Vives, L. (2013). Building Your Company’s Capabilities Through Global Expansion. MIT Sloan Management Review. Retrieved 10 April 2018, from https://sloanreview.mit.edu/article/building-your-companys-capabilities-through-global-expansion/
Lin, H., & Chang, K. (2017). Key success factors of international market development. Maritime Business Review, 2(2), 79-98. http://dx.doi.org/10.1108/mabr-09-2016-0025
Linton, I. (2018). Product Adaptation Strategy. Smallbusiness.chron.com. Retrieved 10 April 2018, from http://smallbusiness.chron.com/product-adaptation-strategy-62189.html
World Business Culture. (2018, January 1). Business Culture in Mexico. Retrieved from https://www.worldbusinessculture.com/country-profiles/mexico/culture/
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